Non gift aid charity donations and self assessment

beefturnmail

I donated some money to charity last tax year. Didn't tick the gift aid box, as I was newly self-employed and was unsure exactly what the consequences would be on self assessment etc, so at the time decided best to leave it.

Now I'm trying to fill in my tax return and unsure whether this should be recorded? There only seems to be an option for gift aid payments, so does this mean you can't claim relief on charity payments i.e. I have to pay tax on the amount I donated?

E.g assuming I want to donate a total of £25:

If I pay tax through PAYE, I pay £20 and then the charity claims the extra £5 (which has been deducted at source) through gift aid.

If I pay tax through SA. I donate £25 and then have to pay £5 tax on the £25?

barak

Provided you paid tax during the relevant tax year at least equal to the amount the charity can reclaim, you can still retrospectively complete a Gift Aid declaration which will apply to gifts made during the last 4 years. I don't see how being self-employed or not makes any difference.

http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm#2

lincroft1710

barak wrote: »

I don't see how being self-employed or not makes any difference.

OP probably didn't know if he would earn enough to pay tax.

barak

lincroft1710 wrote: »

OP probably didn't know if he would earn enough to pay tax.

Yes, but I thought the following -

"If I pay tax through PAYE, I pay £20 and then the charity claims the extra £5 (which has been deducted at source) through gift aid.

If I pay tax through SA. I donate £25 and then have to pay £5 tax on the £25?"

was referring to a possible difference between PAYE and self-employment.

lincroft1710

Good point, barak.

BoGoF

barak wrote: »

Yes, but I thought the following -

"If I pay tax through PAYE, I pay £20 and then the charity claims the extra £5 (which has been deducted at source) through gift aid.

If I pay tax through SA. I donate £25 and then have to pay £5 tax on the £25?"

was referring to a possible difference between PAYE and self-employment.

I'm still not clear what the question is. If you gift aid a donation it makes no difference if you are PAYE or self-employed. Either way you pay £20 the charity claims the extra £5. But you have to have paid sufficient tax to cover the amount the charity is claiming. If you haven't this tax is recovered through your Self Assessment.

beefturnmail

sorry for not clear. What I was asking was is it possible to offset the charity payments against my taxable income (like an expense). I think from the answers that I cannot - the only thing I can do is effectively donate additional money to charity (i.e. by making sure hmrc pass on the tax to charity) by retrospectively claiming gift aid? I can't reduce my tax bill...?

jennifernil

I thought the point of Gift Aid was not to save the giver money, but rather to give the charity extra income?

I think it works like this......

If you want to donate £25, you donate £25 and the charity can claim an extra £6.25 (or something like that).

If you are a 40% taxpayer then the charity gets an extra £6.25, and you pay £6.25 less tax as the grossed up gift extends your basic rate band.

Now off to check up on that!!

jennifernil

beefturnmail wrote: »

sorry for not clear. What I was asking was is it possible to offset the charity payments against my taxable income (like an expense). I think from the answers that I cannot - the only thing I can do is effectively donate additional money to charity (i.e. by making sure hmrc pass on the tax to charity) by retrospectively claiming gift aid? I can't reduce my tax bill...?

You posted while I was doing the arithmetic, but basically that is correct.

For the charity to reclaim the tax you need to give them a Gift Aid declaration, it's not enough just to put it on your tax return.

The charity has to claim.

jennifernil

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

beefturnmail

OK Thanks - that makes sense - I thought I'd heard somewhere you could claim back tax, but it appears you can only if paying higher rate tax.