CTC, WTC and charitable donations

growingafamily

I wondered if anyone could help.
We currently pay 10% of our income as a charitable donation each month.
This will now be done through gift aid - does anyone know if and how this may affect our CTC/WTC payments ??

We have heard it might but unsure.

Thanks

Gaz83

You can deduct "contributions to charity under a payroll giving (GAYE) scheme. If the amount for GAYE has been deducted by your employer, no further adjustment is necessary". Not sure how that relates to Gift Aid though, better to phone the helpline and ask.

growingafamily

thanks gaz
calling is prob best

liney

I have read this, and read again.... are you saying that you think Tax Credits should use the figures after your donation is taken into account?

dmg24

liney wrote: »

I have read this, and read again.... are you saying that you think Tax Credits should use the figures after your donation is taken into account?

Am glad I am not the only person querying that!

Gaz83

Possibly, when I worked there you were allowed to deduct GAYE (Give As You Earn) donations from your total income & they weren't taken into account. That's still the case, but don't know how it relates to Gift Aid.

liney

Seriously, though give your money to charity and then claim it back in Tax Credits? You are kidding me right?

bigbill

Any earnings donation given by you under the gift aid scheme is allowed as a earnings disregard by Tax Credits.

Its taken from your wages before any tax or NI is taken so you save paying this on that amount and the charity gets the full amount.

Tax Credits allows this in full and you would then only include your actaul earnings less this deduction.

growingafamily

Thanks bigbill.
I didn't say I think they should but asked if they do.

liney

Ok, at the risk of seeming rude. Do you really think that you should give money that it appears you can't afford, to a charity, then claim Tax Credits to replace it? Is that fair?

Whether is is how the system works, i am not arguing, but do you think that is morally right? Effectively the goverment (and i!) am donating to the charity of your choice.

robindunne1

It is entirely right that Gift Aid donations are an allowable deduction against income for tax credit purposes.

Your income is worked out on taxable income, which is why the HMRC administrates it and not the DWP. Money given through Gift Aid is not taxable and therefore needs to be deducted from your income. Guidance here:

http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04002.htm

The deduction includes the tax rebate the charity receives as well. Therefore if you give £100 to charity you need to deduct a further 28% eg. £128.

If you give 10% of your income to charity you need to have your award reassessed as soon as possible. Current awards can also be backdated for 6 years.

I help plenty of people at our local church who give 10% and one family I helped managed to get £4000 in back payments!