I don't understand the whole giftaid thing!

JennyP

I give to a couple of charities each year. I don't really keep good records of this but I could probably find them. I always gift aid the money.

I usually ignore the bit on the tax return that asks about charitable giving - should I be filling it in and why? Surely the charities just claim back the tax off the revenue? Does it make any difference to the amount of tax I pay in the end or not? If it does, I clearly need to go through my bank statements and work out what I've donated! It's on a standing order so it doesn't seem like loads but it could be about £1000 a year....

heretolearn_2

You should fill it in but it only has an effect if you are a higher-rate tax payer.

Charities can only claim gift aid tax relief at the basic tax rate. If you are a higher rate tax payer you can then claim the difference for yourself.

JennyP

I will never be a higher rate tax payer

What's the point in filling it out then?

Gas_Powered_Toothbrush

heretolearn wrote: »

You should fill it in but it only has an effect if you are a higher-rate tax payer.

Or if you haven't paid enough tax to cover the gift aid, in which case it'll be included in your liability for the year.

BoGoF

It also comes into play for age allowance purposes.

Savvy_Sue

It's worth keeping half an eye on what payments you're making by Gift Aid to ensure you are paying enough tax to cover them.

There are also some income assessment situations where Gift Aid is taken into account. From memory, I think it's Working Tax Credits or Child Tax Credits: your income is reduced if you've done any Gift Aiding. But I don't think that's widely advertised!

Of course it means that if you're claiming Tax Credits AND you've also got children applying for student loans, your net income is completely different which gets a tad confusing at times.

Newly_retired

BoGoF wrote: »

It also comes into play for age allowance purposes.

Couold you explain this please?

SeniorSam

This is from the Revenue wed site :-

The Gift Aid scheme is for gifts of money by individuals who pay UK tax. Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities or CASCs take your donation - which is money you've already paid tax on - and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on its 'gross' equivalent - the amount before basic rate tax was deducted.
Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it’s worth £12.50 to the charity. For donations between 6 April 2008 and 5 April 2011 the charity or CASC will also get a separate government supplement of three pence on every pound you give.

For more information just by Google Gift Aid

Sam

BoGoF

Newly_retired wrote: »

Couold you explain this please?

Gift Aid is a 'deduction' when it comes to calculating your income for age allowance purposes, so if your income was just over the income limit (£24,000 for the current year) then making gift aid payments to take you under would mean you retained your full age allowance.

zagfles

JennyP wrote: »

I give to a couple of charities each year. I don't really keep good records of this but I could probably find them. I always gift aid the money.

I usually ignore the bit on the tax return that asks about charitable giving - should I be filling it in and why? Surely the charities just claim back the tax off the revenue? Does it make any difference to the amount of tax I pay in the end or not? If it does, I clearly need to go through my bank statements and work out what I've donated! It's on a standing order so it doesn't seem like loads but it could be about £1000 a year....

You have to declare it. It's the same as declaring interest which is taxed at source - it makes no difference to your liability if you're a basic rate taxpayer and aren't affected by age allowances etc, but you still need to declare it. Otherwise you're signing an inaccurate return and theoretically could be prosecuted.

tyllwyd

I never gift aid any charitable donations because I don't want the grief of trying to remember it for my self-assessment tax return. I hate it when charity workers put pressure on me to gift aid - it's my decision whether or not to do it, and as far as I'm concerned they should be grateful for what I'm giving and not hassle me to do more!