PS- Are donations tax deductible in the UK (Besides giftaid)? I’ve been operating on the assumption that they aren’t, but if they were, I could give more.
I think the short answer is ‘depends what you mean?’. Longer answer:
Income tax is fully tax deductible. But if you are a basic rate (20%) taxpayer, this is what Gift Aid is handling and there isn’t much further to do. If you are a higher or additional (40% or 45%) taxpayer then there is additional relief you can claim.
Some pseudo-taxes on higher earners care about Adjusted Net Income. Confusingly, ANI is not your after-tax income, it’s roughly your Gross Income minus Pension Contributions minus Donations; more detail at link. So donations do reduce this. Things which care about ANI:
These are withdrawn entirely if your ANI exceeds £100k.
Note this is a cliff edge not a taper, and if it applies to you you are probably thousands worse off just above £100k ANI vs. just below. Bizarrely this means donating money can leave you better off.
I think the short answer is ‘depends what you mean?’. Longer answer:
Income tax is fully tax deductible. But if you are a basic rate (20%) taxpayer, this is what Gift Aid is handling and there isn’t much further to do. If you are a higher or additional (40% or 45%) taxpayer then there is additional relief you can claim.
This post goes into more detail on this.
National Insurance is not deductible.
Some pseudo-taxes on higher earners care about Adjusted Net Income. Confusingly, ANI is not your after-tax income, it’s roughly your Gross Income minus Pension Contributions minus Donations; more detail at link. So donations do reduce this. Things which care about ANI:
Higher Income Child Benefit Charge
If you have children, this kicks in as your ANI goes from £60k to £80k.
Withdrawal of the Personal Allowance
This kicks in as your ANI goes from £100k to £125k.
30 hours ‘free’ Childcare /​ Tax Free Childcare
These are withdrawn entirely if your ANI exceeds £100k.
Note this is a cliff edge not a taper, and if it applies to you you are probably thousands worse off just above £100k ANI vs. just below. Bizarrely this means donating money can leave you better off.
Thank you! That’s really helpful. I also just saw Will’s post, which has also been useful.