High rate taxpayers miss out on £250 million tax relief

Date: 11th January 2010

Small businesses and high-earning sole traders in need of tax advice could be interested to know that they are be missing out on £250 million a year in tax relief on charitable donations.

This is the estimated amount missed each year, according to the Charities Aid Foundation (CAF).

The organisation has urged people to make use of the relief, which can see tax claimed back by either charities or donors, while they are still able to do so.

According to the CAF, the difference between 20 per cent and 40 per cent tax paid on donations means a charity in receipt of a £100 donation will actually receive £160.20.

However, the government is currently in negotiation over the rules surrounding Gift Aid, which could see the tax relief opportunity scrapped.

Data recently published by the organisation revealed that people in the higher tax bracket claimed back around £280 million in relief on donations in 2008-09.

However, the CAF estimated that almost half higher-rate taxpayers do not realise they are able to reclaim 20 per cent personal tax on the donations.

Mike Packham, head of private clients at the organisation, said: "The lack of awareness of this tax relief and complexity of the process in claiming it back means that charities and donors are missing out on millions of pounds in tax relief."