Whilst waiting for clients to send me information (might be a long wait) I thought that I would get started on my own self assessment and I have a query regarding the Gift Aid
I make a regular monthly payment to my church (registered charity) through the envelope giving scheme (same amout each week put in an envelope and collected during the service). At the beginning of each tax year we complete a form stating how much we will give each week but we don't get a receipt at the end of the year stating how much we have actually paid. Am I still allowed to claim this on my tax return
If you are letting the Church claim gift aid on your donation then I don't believe you can claim a deduction on your Tax Return as you have effectively said to the Church that you will not claim a deduction so they can claim the Tax back from HMRC instead.
As long as it is the same amount each week then you'll know how much you have given. At our church we (I) send letters stating how much they have given. Whoever makes the claim should be able to tell you have much you've given if your not sure.
Does it work filling out the form at the beginning of the year. Our church is seeing donations declining, familiar pattern with there being a very good church school!
The way I see it, you are merely making a claim and it is up to HMRC to cross check that youve paid enough tax and if not, you have to pay the difference. It also enables you to extend the basic rate band and carry back if appropriate.
As you know in advance the amount you are giving (when you fill the form in at the beginning of the year) just use that figure, unless you know you given more/less. The charity are not required to give you a receipt. As you are donating its up to you to keep track of the amount. You should put the amount on the form. If you are a higher rate tax payer, you will get extra tax relief for contributions.
The other reason you need to put it on your tax return, is to confirm you are actually paying tax on the amount you are giving under gift aid. If you don't have enough taxable income (of any kind), then if you make contributions under gift aid you will have to pay the tax to HMRC. I know locally quite a few people have had to stop offering donations under gift aid, as HMRC have picked up that they don't have enough income.
I read somewhere of a case of a gentleman inheriting £15,000, who did not want to money, as he was in receipt of Pension credits and gave it to his local church. When he donated the money he signed it over under gift aid. The HMRC then asked him to pay the tax (2010/11 this would be £3,750) on it as he had no taxable income to cover the amount donated under Gift Aid!
I could be wrong, but in the case of the gentleman donating his inheritance, he couldn't donate it under gift aid,. Isn't gift aid a donation from taxable income where income tax has been paid?
I could be wrong, but in the case of the gentleman donating his inheritance, he couldn't donate it under gift aid,. Isn't gift aid a donation from taxable income where income tax has been paid?
Yes it is - but thats why donating his inheritance under gift aid caused him to have a large tax bill! Thats the problem with gift aid - some people donate under gift aid when they should not. So if you complete a tax return, don't have taxable income and declare gift aid contributions, you will get a tax bill
If you are a higher rate tax payer, you can claim some tax back as the basic rate band is extended by the amount of the gross donation. Meaning you are paying tax at 20% rather than 40% on some of your income. if you are not a basic rate tax payer there is no benefit to you, other than feeling better about your donation.
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
