Questions about Gift Aid for occasional taxpayers

sarahlouise210

I honestly believe that small donations would never be checked - it just would not be cost effective.

klondyke

I make donations to my CAF account when I know I have paid enough tax to cover it - then use vouchers or online gifts later on, even if not taxable at that time.

I carefully accumulated a fairly large sum before retiring and then, to my horror, CAF wrote to say that as I had not been using it, they would distribute as they thought fit. Yikes!!!! Fortunately there was a note to say that if I didn't want this to happen, get in touch etc - but it could have been very easy for that letter to go astray, so be careful!

Anyway, I pointed out to them that there could be many peeps like me, stashing taxed amounts before becoming becoming a non or small taxpayer. It sounded as though they hadn't thought of that, so I expect they are more careful now.

rosshenson

This works best if your income is decreasing. If you have paid income tax or capital gains tax in one tax year and it has not all been claimed back by gift aid that year you can make use of it during the next tax year. This only applies to gifts made up to the end of the next January. If you have to send in a tax form there is a space for you to do this. If you have not received a tax form you can do this by just writing to your tax office. Unfortunately it is now too late to do anything for this tax year.

I have done this for the last few years as I cannot be certain in advance what my income will be for a specific year. I now get a tax form but when I didn't I just sant a letter and received an acknowledgement from the tax office. As long as you know that you have paid enough tax you do not need to inform the charity.

Example: You paid £500 tax in 2006/7 and gave £500 in donations to charity. The charities can claim £140 back in tax so you have effectively paid £ 360 in tax. You don't expect to pay any tax in 2007/8. However, you can still gift aid £1600 (leading to a tax reclaim of just under £360) to charities via gift aid provided you do it by Jan 31st 2008 AND inform the tax office that you have backdated the giving.

At the moment I cannot quickly access a sample letter to use but can put it up later if there is interest.


Mike

Savvy_Sue

sarahlouise210 wrote: »

I honestly believe that small donations would never be checked - it just would not be cost effective.

Might depend on the size of the charity: if it's a small one, I know it's a fine tooth comb they use!

Savvy_Sue

rosshenson wrote: »

At the moment I cannot quickly access a sample letter to use but can put it up later if there is interest.

thanks, that might be very useful to people.

rosshenson

Savvy_Sue wrote: »

thanks, that might be very useful to people.

As I mentioned before if you have a tax return to send back it is easy. Just fill in the total in the appropriate box. The proforma I was sent suggested including a list of the gifts you are backdating. I don't know if that is essential but would probably be wise. You can only backdate a complete donation. So if you want to make a large donation and use unclaimed tax from the previous year for some of it only, you will need to make two donations rather than one.

I have adjusted the letter to suit payments made between tomorrow (April 6th) and the end of January 2008 where you want the tax reclaim to come from tax you paid in 2006/7 tax year. Obviously for later tax years adjust the dates.


Mike




before late January 2008


Dear Sir,

Your reference XXXX
Last Tax reference XXXX
NI number XXXX


ELECTION TO CARRY BACK GIFT AID PAYMENTS

The last correspondence I have received from the Inland Revenue has been from your office under your title. I am therefore sending this notification of election to you. There will be no effects resulting in a change to payment of tax in either 2005/6 or 2006/7. To date, I have not received a tax return for the year to 5th April 2007.

However, please accept this letter as being an election under S98(2) Finance Act 2002 to carry back net gift aid payments of £XXXX made by me to charity as qualifying donations in the current year of assessment, so that they are treated as having been made in the previous year of assessment in accordance with S98(4) Finance Act 2003.

I append a list of the specfic donations, overleaf.


Yours faithfully,[/I][/I]