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I understand the advantage of tax relief getting to the High Rate tax payer and Additional tax payer as it is demonstrated with example in the study note.
But how I am not able understand how it will be beneficial to a Basic tax payer. Please explain the same with the following example:-
Income – 25000 Charity paid – 2000 what is the tax liability and tax payable ?
Satheesh RV
The advantage is that if you give £2,000 to charity, the charity will receive £2,500 – being the £2,000 that you give plus the £500 paid over by HMRC being the basic rate tax that they had deducted from £2,500 (2500 x 20%) of your income which they now give to the charity.
if you want to look at it in terms of pure personal benefit then if a taxpayer wants a charity to receive a gift of £2,000 then the taxpayer need only give £1,600 and HMRC will give to the charity £400 of the income tax they had deducted from your income.
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