2023/24 full tax assessment + gift aid

Yorkie1

I've just received my 2023/24 tax letter, saying I owe some tax. I'd like to understand whether the calculations are right, particularly re. the gift aid figure. Hopefully someone can help me out!

The letter says:

Income: £49284.20 (salary) + £2429.00 (untaxed interest) = £51713.20 [these are both correct by my records]
Income tax: £7207.00

Less deductions: Charitable donations £1950.00 [not sure how this has been calculated]
Income less total deductions = £49763.20

Less your allowances: Personal allowances £12570.00
Total taxable income = £37193.20

Income tax rates:
PSA at 0% on £1000 = £0
Basic rate at 20% on £38143.00 = £7628.60
Total: income £39143; tax £7628.60

Total tax payable = £7628.60
Tax already paid = £7207.00
You owe HMRC = £421.60
[END]

My records from 2023/24 show that I made charitable donations of £3440, on which gift aid should have been claimed - £860 I think.

Is it likely that HMRC don't have the correct details of all the charitable donations I made last tax year, or is there a complex calculation behind the scenes which means they have their figures right?

Thanks a lot.

Dazed_and_C0nfused

Yorkie1 said:

I've just received my 2023/24 tax letter, saying I owe some tax. I'd like to understand whether the calculations are right, particularly re. the gift aid figure. Hopefully someone can help me out!

The letter says:

Income: £49284.20 (salary) + £2429.00 (untaxed interest) = £51713.20 [these are both correct by my records]
Income tax: £7207.00

Less deductions: Charitable donations £1950.00 [not sure how this has been calculated]
Income less total deductions = £49763.20

Less your allowances: Personal allowances £12570.00
Total taxable income = £37193.20

Income tax rates:
PSA at 0% on £1000 = £0
Basic rate at 20% on £38143.00 = £7628.60
Total: income £39143; tax £7628.60

Total tax payable = £7628.60
Tax already paid = £7207.00
You owe HMRC = £421.60
[END]

My records from 2023/24 show that I made charitable donations of £3440, on which gift aid should have been claimed - £860 I think.

Is it likely that HMRC don't have the correct details of all the charitable donations I made last tax year, or is there a complex calculation behind the scenes which means they have their figures right?

Thanks a lot.

Have you told them about the £3,440 value?  Or the gross donation of £4,300?

But even if you have it doesn't actually make any material difference.  From what you have posted you are already a basic rate payer based on just the estimated Gift Aid amount of £1,950 (an old figure you have previously supplied?).

The £7,628.60 tax due figure looks correct to me so if you have already paid £7,207 then £421.60 is correct as the remaining amount underpaid.

One thing which is a bit odd is deducting the Gift Aid as that isn't a deduction, it increases your basic rate tax band.  But the end outcome does look ok.

The total taxable income amount of £37,193 is really the (incorrect amount of) total income that needs to be taxed.  And if you look at what has been taxed that totals £39,143 (which is correct).

Yorkie1

Thanks Dazed_and_Confused. 

I've never informed HMRC of gift aid amounts; I just assumed that the records would all tie up in the same way that savings interest does, for example.

It's good to have it confirmed that I am in basic rate tax band; you helped me last year to do those maths, many thanks. If I now inform HMRC of the correct amount of Gift aid contributions, would that have an impact on the tax they calculate I owe?

And if the answer to that is Yes, what is the best way to inform them?  I have a Govt Gateway account - is it that, or do I need to register elsewhere? (Previous experience of the phone system indicates you can wait for ages!)

Dazed_and_C0nfused

Yorkie1 said:

Thanks Dazed_and_Confused. 

I've never informed HMRC of gift aid amounts; I just assumed that the records would all tie up in the same way that savings interest does, for example.

It's good to have it confirmed that I am in basic rate tax band; you helped me last year to do those maths, many thanks. If I now inform HMRC of the correct amount of Gift aid contributions, would that have an impact on the tax they calculate I owe?

And if the answer to that is Yes, what is the best way to inform them?  I have a Govt Gateway account - is it that, or do I need to register elsewhere? (Previous experience of the phone system indicates you can wait for ages!)

I find that very hard to believe.  Have you ever used an accountant/tax agent to deal with your tax affairs?  Or ever filed a Self Assessment return?

Not sure which part of this wasn't clear 🤔

But even if you have it doesn't actually make any material difference. From what you have posted you are already a basic rate payer based on just the estimated Gift Aid amount of £1,950 (an old figure you have previously supplied?).

There is no harm in keeping HMRC informed with all the direct information but as explained above, for 2023-24 it won't change the overall result of the calculation you have received.  You will just have an even bigger basic rate band, some of which is still no longer used.

If you are a higher rate payer in 2024-25 then it might make more of a difference if you told them what your expected Gift Aid donations are going to be in the current year so your tax code is as accurate as possible.

Yorkie1

Thanks for clarifying. I've re-read and think I understand. Even if they had the correct amount, I'd still pay the same amount of tax that they've calculated.

No accountant or self-assessment. I've never gone online to check or update tax records. I just assumed that when charities claimed the Gift Aid, they also told HMRC who the donors were (as you always have to provide this info to the charity), and HMRC used that information to update individuals' tax records. Perhaps that's an inaccurate assumption though ... :

So, to update for current and future tax years, how is the best way to do that? Do I register for an online tax account (I assume it's different from Govt Gateway)? And do I input the donation amount or the grossed up amount?