Income tax relief for charitable giving is particularly important for Scottish taxpayers. In 2018/19 we hit higher rate tax thresholds sooner than other UK taxpayers, while also having five main tax rates instead of three to think about.

Some other important tax increase trigger points are:

•Incomes over £50,000 for clawback of Child Benefit

•Incomes over £100,000 for withdrawal of personal allowance

•Taxpayers in generous final salary pension schemes with income over £110,000 may incur pension tax charges.

Charitable giving under Gift Aid pushes up each tax rate threshold, provided you remember to claim relief from HMRC. Most taxpayers use cash Gift Aid, but there is also retail Gift Aid which you can claim on the eventual sales proceeds of goods donated to charity shops.

For every £100 donated, the charity can reclaim £25 from HMRC, with the taxpayer treated as having gifted £125. This 20% Gift Aid basic rate applies to Scottish taxpayers in 2018/19, whatever their actual marginal rate.

How it works in practice

Andy is a 46% Scottish taxpayer who Gift Aids £2,000 to charity in 2018/19. The charity reclaims tax of £500 and gets £2,500. Andy claims higher rate tax relief of £650 on his gross £2,500 gift, which is 26%(46% - 20%) of £2,500. The donation has cost him £1,350 (£2,000 - £650).

Alternatively, full tax relief is available under different rules if you give quoted shares or UK land holdings to charity. The gift value is deducted from your taxable income, so you as donor get all the tax relief, not just the higher rate element.

Top tip: Taxpayers who Gift Aid effectively have a bigger slice of income taxed at basic rate. For any cash gifts made before submitting your tax return you can choose whether to claim tax relief that year or the previous year, so allowing retrospective tax rate planning.

Read the next section of our tax planning guide: selling your property or return to the main page.

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