Donations made to charity through CAF Give As You Earn are taken from pay or company/personal pension after National Insurance contributions are removed but before Income Tax is calculated and deducted. This means there is tax relief, depending on the rate of tax paid. So, for example, for a basic rate taxpayer, giving £1 would only cost 80p.
Tax is calculated on a lower amount; this could change your tax bracket and lower the amount of tax you pay
Tax relief on donations is applied immediately, at an individuals highest rate of tax, and this money can be passed onto charity
Depending on tax bracket a £20 donation would cost the following:
- As a 20% taxpayer a £20 donation costs you £16.00
- As a 40% taxpayer a £20 donation costs you £12.00
- As a 45% taxpayer a £20 donation costs you £11.00