Don't pay Income Tax.

slinga

This is a query from my next door neighbour.

He doesn't pay income tax. All above board.
Retired, no salary, lives off interest on capital, all declared etc.

He does give quite a lot to his church in the weekly collection which is done through a gifting envelope I think it's called.
The envelope thing says if he is a UK taxpayer then 20% of his collection payment can be recovered by the church from the IR. if he gives permission.
As he doesn't pay tax because he has little income he doesn't give his permission for the church to reclaim tax on his gift.

But can he give his permission????

This would mean an extra £200 per year going to the church.

I think I've got that all correct.

trevormax

First off I think it is possible he is paying tax on something. If he is recieving a state pension and a private pension plus interest then it is very likely he is paying tax on the private pension and the interest unless all of his annunal income is below the personal allowance (£6,475 under 65, £9,490 65-74 and £9,640 75 and over).

If the interest you mention is bank or building society interest and he has not completed a form R85, he should be paying tax on the interest. Banks automatically deduct 20% tax from the interest and then pay the net amount to the customer. If you do not earn enough to take you over the personal allowance threshold then you fil in the R85 to tell the banks to pay you gross interest.

You need to find out if he is actually paying tax first. If he is paying enough tax to cover the gift aid payment then yes he can give permission. If he does not pay enough tax to cover the gift aid payment, then giving permission for the church to claim the tax would result in him being underpaid meaning he will have to pay HMRC the amount of tax the church has claimed. This is a problem that affects many elderly people who pay money to a charity on the gift aid scheme but do not pay enough tax to cover the amount donated.

slinga

Thanks that gives me enough info to have a word with him.

Just for completeness he doesn't pay any tax either on his small pension, gov pension or income from savings which is paid to him tax free.
Everything he gets is below his personal allowances and he has filled in the R85 etc.

So it looks like his church can't benefit.

JimmyTheWig

Is he married to a tax payer?

p00hsticks

slinga wrote: »

As he doesn't pay tax because he has little income he doesn't give his permission for the church to reclaim tax on his gift.

But can he give his permission????

No. In order to be able to legitimately sign a gift-aid declaration you have to state that you are paying at least as much in tax as the charity will be reclaiming, and in the case you describe this isn't true.

http://www.hmrc.gov.uk/charities/gift-aid.htm