RDRM32450 - Remittance basis: accessing the remittance basis: remittance basis charge - nomination of foreign income and gains: charitable donations and Gift Aid

From 6 April 2025 it is not possible to use the remittance basis of taxation, however, any foreign income or gains that have arisen to a former remittance basis user prior to this date will continue to be taxed at the usual tax rates if they are remitted to the UK on or after 6 April 2025, subject to any amounts designated under the temporary repatriation facility (TRF) – see RDRM71000. 

The guidance in this section only applies to tax years up to and including the 2024-25 tax year and remains for reference purposes only.

Chapter 2 of Part 8 ITA 2007 provides relief from tax for some gifts of money to charities that are made by individuals. This is known as ‘Gift Aid’. One part of the Gift Aid rules is that the donor must pay at least as much UK income tax and/or capital gains tax in the tax year as the amount that is repayable to the charity.

  • ITA07/s414(2)(a) treats a qualifying donation as if it had been made after deduction of basic rate income tax.
  • If the donor has not paid enough UK income tax and capital gains tax to ‘frank’ the gift aid donations in a tax year, a further amount of income tax is charged to make up the shortfall (ITA07/s424).

The Remittance Basis Charge

In exactly the same way as any other amount of income tax or capital gains tax, amounts of tax that are paid to satisfy the remittance basis charge can be used to frank Gift Aid donations. That is because the remittance basis charge is ‘income tax charged’ or ‘capital gains tax charged’ on nominated income and/or gains.

However, where the individual has:

  • chosen to use the remittance basis, and
  • claimed Gift Aid tax relief

any income tax that is charged under ITA07/s424 is not taken into account when calculating the ‘relevant tax increase’ (see RDRM32330) that is required to produce the remittance basis charge (ITA07/s809C(5A) and s809H(5A)).

Effect

No matter how it is calculated, the remittance basis charge will always be the full amount applicable for that year (see RDRM32300).