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HMRC internal manual

PAYE Manual

Coding: coding allowances and reliefs: gift aid

From 6 April 2000, all gifts of money by individuals to charity, including Deeds of Covenant, fall within the Gift Aid scheme. There is no longer any lower limit for relief.

Purely for the purposes of computing a person’s entitlement to the age-related personal allowance or the Married Couple’s allowance, a taxpayer’s Adjusted Net Income (ANI) is reduced by the grossed up Gift Aid donations made during the relevant tax year.

To see the conditions and how to calculate the relief see chapter 3 ‘Gift Aid’ and chapter 3.6 ‘Gift Aid declarations’ (GOV.UK).

Enter the amount of Gift Aid payments and the system will calculate the coding relief using the correct rates of tax. All taxpayers, regardless of where they live will have their gift aid payments grossed up at the rUK basic rate. No further tax tax relief will be given or the excess clawed back for basic rate taxpayers if the Scottish basic rate is different from the rUK basic rate.

Where an individual has no liability to pay tax, guidance at PAYE11115 and PAYE80032 should be followed to recover any incorrect basic rate tax relief claimed by the individual.

Where an individual has liability to pay tax at higher rate or additional rate further relief will be due and is calculated using the rest of UK (rUK) rate or  Scottish tax rates depending on the individual’s residency status recorded.

Follow the guidance at PAYE93036 where gift aid has been coded year on year with no evidence of the original claim.

Note: Registered Charities will reclaim the tax on the individual’s donation at the same rate for all taxpayers, regardless of where they live.  For 2016-17 and 2017-18 this rate is 20%.

Higher rate customers will get tax relief at their correct rate (rUK or Scottish rates) through their reconciliation or SA return.