SA - Payments to Charities

starM

Hi,

I have one property rented out and I was going though online SA return this morning. 1st time completing it. It asks if I pay to charity. Now I do pay to charity, if I declare that aswel will overall tax payable will decrease?

Every year I also pay "zakat" which is religious charity have to give on any jewelery or cash I have in the bank. Just last Sept I paid around £400.

I have checked on HMRC website but cannot seem to find any information on this. Any advise or links will be appreciated.

Thanks
MS

ceeforcat

If you pay £400, you will be deemed to have paid £500 and deducted £100 in tax - this can be reclaimed by the charity.

If you pay higher rate tax, the amount before this 'kicks in' will be extended by £500. A 40% tax payer will claim a further £100 in tax. If you are a basic rate taxpayer, you will be unaffected.

Savvy_Sue

I'd just like to clarify here: is what HMRC regard as a charitable donation the same as what the OP has been making? As I understand it, HMRC would regard a payment to charity as a payment to a UK registered charity, as found on the Charity Commission website, under the Gift Aid scheme.

That allows the charity to reclaim the basic rate tax paid by the individual, and the individual to claim the difference between that and the higher rate of tax paid.

I'm probably not making much sense here, and it's not my area of expertise so I may be wrong, but maybe one of you experts could confirm or deny my understanding!

jennifernil

That would be my understanding too. A Gift Aid declaration needs to be completed for the Charity to reclaim the tax.

It would only reduce the donor's tax if they paid higher rate tax. But only if done via Gift Aid.

Savvy_Sue

I did go and google a little bit: there is at least one UK registered charity which allows you to calculate and pay your zakat online, and they do also offer the opportunity to use the Gift Aid scheme if you're a UK taxpayer.

starM

Hi, Thanks for all your replies. I have just registered for charity account through https://www.cafonline.org - The previous payments I made was using a standing order & debit card directly to charities. I did not declare any gift aid previously. Can I still declare it on my SA return to reduce tax payable or it only world have worked if I made a declaration of gift aid.

MS

jennifernil

You need to give each charity a Gift Aid declaration, otherwise they cannot reclaim the tax.

You can send these in now (to the charities), most have a bit saying that any payment made back to (not sure of the date) should be counted.

It only affects your tax if you are a higher rate tax payer. Then you get 20% tax refund on giving.

Info here.....

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

Savvy_Sue

jennifernil wrote: »

You can send these in now (to the charities), most have a bit saying that any payment made back to (not sure of the date) should be counted.

It's the last 4 years, not sure if this is tax years or calendar years, but it's gone down. Not all charities have updated their Gift Aid forms, it used to be that you could backdate it to a particular date, then it was for the previous 7 years (up to 7 years after that date, sorry can't remember what it was), but it's now down to 4 years.

Main thing is that your GA declaration says you want them to be able to claim on any previous giving: the form often has options like "this gift", "this gift and any future gift", "the gift of £x I gave on Y date" and "this gift and anything I've given since ..."

But it's only higher rate taxpayers who get any benefit themselves from Gift Aid, as already stated.