Gift Aid and Higher Rate tax band

grazingsheep

Shaun earns £44,600 and has £800 interest in 2017/18 (total £45,400).
The higher rate tax is £45,001 for 2017/18.
So Shaun will be a higher rate taxpayer, and pay 40% tax on the £400 above the £45,000, and only have a £500 tax-free savings allowance rather than (up to) £1,000 on the interest.
Shaun donates £600 through Gift Aid to his favourite charity.
1. Does this mean that Shaun will get up to £1,000 tax-free savings allowance rather than £500?
2. And if Shaun’s wife Lola earns less than the Personal Allowance (£11,500 for 2017/18) does that mean Lola can apply for the Marriage Allowance to transfer, ie does the Gift Aid make Shaun a Basic Rate tax payer or is he still classed as a Higher Rate tax payer who has moved their tax threshold?

00ec25

presumably there is also an answers section to go with the questions section you copied these from?

grazingsheep

These weren’t copied from anywhere. I haven’t been able to find a clear answer which is why I asked the question.

Dazed_and_confused

Does this help at all?

https://www.litrg.org.uk/sites/default/files/files/Savings%20and%20dividend%20tax%20FINAL.pdf

grazingsheep

That link is more useful than anything I have found so far.
It says that the amount of the Personal Savings Allowance depends on the adjusted net income which is your total taxable income (including savings income and dividends) less certain tax reliefs, for example Gift Aid.
Does the same apply to the marriage allowance?

stoozie1

you need to pay tax at a rate no higher than basic rate (and the 2 other rates stated)

wrote:

Tax reduction: entitlement
(1)An individual is entitled to a tax reduction for a tax year of the appropriate percentage of the transferable amount if the conditions in subsection (2) are met.
(2)The conditions are that;
(a)the individual is married to, or in a civil partnership with, a person who makes an election under section 55C for the purposes of this section which is in force for the tax year (the individual';s spouse or civil partner),
(b)the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the dividend ordinary rate or the starting rate for savings,
(c)the individual meets the requirements of section 56 (residence) for the tax year, and
(d)neither the individual nor the individual's spouse or civil partner makes a claim for the tax year under section 45 (married couple's allowance: marriages before 5 December 2005) or section 46 (married couple's allowance: marriages and civil partnerships on or after 5 December 2005)."

http://www.legislation.gov.uk/ukpga/2014/26/section/11/enacted

marlot

grazingsheep wrote: »

Shaun earns £44,600 and has £800 interest in 2017/18 (total £45,400).
The higher rate tax is £45,001 for 2017/18.
So Shaun will be a higher rate taxpayer, and pay 40% tax on the £400 above the £45,000, and only have a £500 tax-free savings allowance rather than (up to) £1,000 on the interest.
Timmy donates £600 through Gift Aid to his favourite charity.
1. Does this mean that Shaun will get up to £1,000 tax-free savings allowance rather than £500?
2. And if Shaun’s wife Lola earns less than the Personal Allowance (£11,500 for 2017/18) does that mean Lola can apply for the Marriage Allowance to transfer, ie does the Gift Aid make Shaun a Basic Rate tax payer or is he still classed as a Higher Rate tax payer who has moved their tax threshold?

No. Timmy's tax affairs would make no difference to Shaun.

grazingsheep

True. It should have read Shaun not Timmy. I got my rams muddled.
I will change the original so it makes more sense.