Gift Aid Tax Issue

bt7019

I was left money by my mother which I’ve just used to purchase a flat to rent & therefore I registered to make a tax return for last year, albeit the purchase was made right at the end of the year & the tenant had not moved in. I also decided to donate £20000 of the inheritance to charity which was done as around 6 separate donations over the year as money came through from the inheritance. I’m fairly sure I ticked the gift aid box each time & now that I’m filling in the return, it’s suggesting I owe around £5000 in tax I think because I only paid around £4000 tax on my salary last year.

Im guessing a little bit on this & if I’m right, it’s my mistake as I’ve never been in this position before to be able to donate more than small amounts & I’ve not thought about the tax part when I’ve made the donations - charities always want you to tick the gift aid box & as I’m a taxpayer I did so without looking in detail. Obviously if I’d realised what would happen, I’d have waited until now to donate some of the money, or possibly better still, not ticked the gift aid box on all the donations. But do I have any options now beyond having to find £5000 tax ? Can I just contact one of the charities & ask them to amend my donation? Just feels a bit demoralising given I tried to give money away now in good faith even if it is my not knowing the rules. Thank you for any advice anyone can give.

Dazed_and_C0nfused

it’s suggesting I owe around £5000 in tax I think because I only paid around £4000 tax on my salary last year.

That doesn't really make sense.

Have you included your employment on the tax return?  

If so you would only owe £1,000 for the Gift Aid, not £5,000.

FatherTireseus

That was very generous of you to give such large sums to charity. 

The rule is that you need to have paid enough tax from income or capital gains to cover the amount of tax that the charity would reclaim via gift aid.  If not, the individual making the donation is liable to pay the difference. 

But as Dazed_and_C0nfused says, it should be the difference between the two, not the full amount of tax. 

I think you can cancel a gift aid declaration within 30 days but unless you made your last donations on April 4th or 5th, I fear you may now be out of time.

lr1277

Some charities point out that a gift aid declaration made today can be applied to all contributions in the last 4 years.

I don't know if this means they keep records going back 4 years and if you change from a tax payer to a non-tax payer, how this affect matters.

Other charities ask you to contact them if your tax status changes, presumably because you didn't allow them to claim gift aid and now are paying suficient tax for gift aid to be claimed.

You could ring the charities and tell them you were mistaken about the gift aid declaration and see if they can remove this declaration they send to HMRC against your name.

sheramber

lr1277 said:

Some charities point out that a gift aid declaration made today can be applied to all contributions in the last 4 years.

I don't know if this means they keep records going back 4 years and if you change from a tax payer to a non-tax payer, how this affect matters.

Other charities ask you to contact them if your tax status changes, presumably because you didn't allow them to claim gift aid and now are paying suficient tax for gift aid to be claimed.

You could ring the charities and tell them you were mistaken about the gift aid declaration and see if they can remove this declaration they send to HMRC against your name.

If it is possible for them to cancel the Gift Aid donation they would also have to pay back the money they claimed.

sheramber

https://www.gov.uk/guidance/gift-aid-declarations-claiming-tax-back-on-donations#:~:text=Gift Aid declarations.-,Cancelled declarations,Gift Aid donations already made.&text=Donors can't cancel declarations,they've made the donation.

Cancelled declarations

A donor can cancel their declaration at any time, eg, because they no longer pay UK tax. Cancellation will not affect Gift Aid donations already made. Once a declaration has been cancelled, any further donations from that donor will not qualify.

Donors can’t cancel declarations for one-off donations once they’ve made the donation.

lr1277

Actually having read the guidance on the Charity Commission web pages, charities are told to keep giftaid declarations for 6 year. But changing a giftaid declaration is entirely upto the charity. So suggest you ask them.

Jeremy535897

If the charity has not yet reclaimed the tax concerned, they may be able to delete the declaration, but why would they, particularly where the gift is a one off, and is large?

The only other possibility is to argue that the charity has not met the requirements. See:
https://www.gov.uk/government/publications/charities-detailed-guidance-notes/chapter-3-gift-aid

bt7019

Thank you to all who have replied. One thing in particular that has helped is that I didn’t initially enter my salary as it said it was optional, but on the advice above I’ve revisited that page & entered it & on the new calculation I’m due to pay around £700 tax instead which clearly is much less of an annoyance. I know this might sound obvious to those who have been completing tax returns for years but I’ve never had to do one in my life before & my gift aid donations prior to last year have been minimal.

 I may well contact the charity I gave most to & see if they can do anything - I’ll happily donate the amount equivalent to what I’d pay in tax to them if I can change it. Otherwise, I accept its my mistake for not fully understanding the rules - I’m sure I’m not the first person but all charities try & encourage you to tick gift aid so I just did it without giving it enough thought - lesson learnt. It feels a little disappointing given this was money left to me, but I guess I should have taken advice before giving a large sum away. If I get any joy with this, I’ll post another reply to answer my question. Thanks again

Dazed_and_C0nfused

Thanks for the update.
As you have now realised a tax return is for you to declare all of your taxable income 

[Deleted User]

The ‘optional’ statement on the tax return is very misleading. Obviously it’s only optional in the sense that any section does not require completion if not appropriate to the taxpayer which, to me, is something entirely different.