Gift Aid & Gift Relief - HELP!!
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Hi Can anyone help explain the calculation of Gift Aid and Personal Pensions and Gift Relief and Rollover Relief.
Gift Aid / Pensions:
I understand that you gross up the amount paid, but I am confused what to do if they are a higher rate tax payer. In the osbourne books and my tutor says to add the grossed up amount to extend the 22% tax band, which I understood and did, but in a past paper PCT June 06 they have not done this and I cant understand what they have done.
Gift Relief / Rollover Relief:
I understand that this is when you get a deferred gain and can calculate up to this part but I am confused when it comes to selling the asset after this.
Has anyone got any notes on these items or can anyone explain it in a simple way please??
Role on next Friday!!!!
Cheers Cat
Gift Aid / Pensions:
I understand that you gross up the amount paid, but I am confused what to do if they are a higher rate tax payer. In the osbourne books and my tutor says to add the grossed up amount to extend the 22% tax band, which I understood and did, but in a past paper PCT June 06 they have not done this and I cant understand what they have done.
Gift Relief / Rollover Relief:
I understand that this is when you get a deferred gain and can calculate up to this part but I am confused when it comes to selling the asset after this.
Has anyone got any notes on these items or can anyone explain it in a simple way please??
Role on next Friday!!!!
Cheers Cat
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Comments
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Re:Gift Aid & Gift Relief - HELP!!
Cant help too much with gift aid, i did PCT in december so seem to have fogotton all of what i dont use at work. Other than what u said about grossing up the amount and extending the basic rate band.
Gift relief:
-If an asset is gifted, it is treated as though market value has been received.
-Gift relief transfers the gain to the recipient of the gift.
-When the recipient comes to sell the asset, the cost of the asset (which is treated as market value as they paid nothing for it) is reduced by the amount of the deferred gain, which will therefore give rise to a higher gain.
Rollover relief:
-If all of the proceeds of an asset are reinvested in the purchase of another asset the whole gain can be deferred.
-If only part of the proceeds are reinvested in the purchase of another asset, the gain equal to the amount that hasnt been reinvested cannot be deferred and is chargeable immediately. The amount that has been reinvested can be deferred.
-The deferred gain is deducted from the cost of the new asset. So when the asset it sold the gain is higher than it would have been by the amount of the deferred gain.
Both gift aid and rollover relief defer the gain arising before taper relief.
I hope this helps!!!
I no what u mean about roll on next friday. I cant wait either!!
Good luck
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Re:Gift Aid & Gift Relief - HELP!!
Samgibby - that is textbook - no really, that is straight from the text book!
Cat1 - you should take note of Samgibby posts because it is quite clear.
With regard to the gift aid you are quite correct in your thinking and without looking at the paper you're referring to I would presume they might not have extended the band becasue the taxpayer was only a basic rate payer anyway?
Either way, you're on the right lines! Keep going!
Regards
Dean0 -
Re:Gift Aid & Gift Relief - HELP!!
Thanks guys thats cleared things up for me!
Good luck too xx0