gift aid payment personal tax

meibaker

hi, i have a quick question about gift aid payment that i am confused about
for example if a taxpayer earns £50,000 p.a and he donates about £800 to charity, so the total gift aid payment will be £1,000,
so he will have to pay
£37,400 x 20% = £7480
£12,600x40%= £5040
£1,000x20%=200
total = 12720, is that right?
thanks

sammyd22

meibaker wrote: »

hi, i have a quick question about gift aid payment that i am confused about
for example if a taxpayer earns £50,000 p.a and he donates about £800 to charity, so the total gift aid payment will be £1,000,
so he will have to pay
£37,400 x 20% = £7480
£12,600x40%= £5040
£1,000x20%=200
total = 12720, is that right?
thanks

1) You dont pay any tax on gift Aid.
2) You only Paid £800 not £1000??
3) You havent deducted Personal Allowance.

Bear in mind i havent done tax for a couple of years so this may need to be clarified!

Regards

A-Vic

sammyd22 wrote: »

1) You dont pay any tax on gift Aid.
2) You only Paid £800 not £1000??
3) You havent deducted Personal Allowance.

Bear in mind i havent done tax for a couple of years so this may need to be clarified!

Regards

you gross up gift aid for full allowence so 800 is 1000 gift allowence deduction

so

50,000 =

37400 x20% = 7480
(for gross up figure 100/80*800) 1000*20%=200
(50,000 - 37400 = 12600) (12600-1000= 11600)
then
11600 x 40% 4640

total tax liability = 12320

Personal allowence (6475)

tax payable = 5845

i think can anyone confirm as far as i can remember you work out gift aid before you work out the higher rate

qwerty

If a taxpayer makes a charitable donation under gift aid, as Sammyd22 has already mentioned, for a £1,000 gross donation you would only need to give £800 to the charity and the charity will then claim the rest from the government.

When calculating the donee's tax liability (assume £50k if after personal allowance) you need to extend the basic rate band by the gross charitable contribution, therefore:

Normal basic rate threshold £37,400
Gross contribution £ 1,000
Revised basic rate thereshold £38,400

TAX PAYABLE:
£38,400 X 20% £7,680
£11,600 X 40% £4,640
Total tax payable £12,320



Hope that helps.

A-Vic

qwerty wrote: »

If a taxpayer makes a charitable donation under gift aid, as Sammyd22 has already mentioned, for a £1,000 gross donation you would only need to give £800 to the charity and the charity will then claim the rest from the government.

When calculating the donee's tax liability (assume £50k if after personal allowance) you need to extend the basic rate band by the gross charitable contribution, therefore:

Normal basic rate threshold £37,400
Gross contribution £ 1,000
Revised basic rate thereshold £38,400

TAX PAYABLE:
£38,400 X 20% £7,680
£11,600 X 40% £4,640
Total tax payable £12,320



Hope that helps.

you notice we had the same answer apart from PA lol

sammyd22

qwerty wrote: »

If a taxpayer makes a charitable donation under gift aid, as Sammyd22 has already mentioned, for a £1,000 gross donation you would only need to give £800 to the charity and the charity will then claim the rest from the government.

When calculating the donee's tax liability (assume £50k if after personal allowance) you need to extend the basic rate band by the gross charitable contribution, therefore:

Normal basic rate threshold £37,400
Gross contribution £ 1,000
Revised basic rate thereshold £38,400

TAX PAYABLE:
£38,400 X 20% £7,680
£11,600 X 40% £4,640
Total tax payable £12,320



Hope that helps.

Yes thats perfectly put!

qwerty

On the personal allowance matter - assuming the £50k was gross income you would then have:

Gross income £50,000
Personal Allowance (£6,475)
Net income £43,525

TAX:
£38,400 X 20% £7,680
£ 5,128 X 40% £2,050
Total tax payable £9,730

The personal allowance reduces the income before applying the tax rates, not the tax due (unfortunately!).

A-Vic

ooo i always put that bloody thing in the wrong place my bad

coojee

So does that mean that if you earn only just above the 40% threshold and make gift aid payments that you can get a repayment of tax? (Cos you've paid too much under PAYE) And is it only certain GIft Aid payments that apply? I'm thinking of the small entrance fee type things, you know when you go the zoo and tick the box to say the zoo can claim gift aid, can you use these to increase your 20% band?

A-Vic

coojee wrote: »

So does that mean that if you earn only just above the 40% threshold and make gift aid payments that you can get a repayment of tax? (Cos you've paid too much under PAYE) And is it only certain GIft Aid payments that apply? I'm thinking of the small entrance fee type things, you know when you go the zoo and tick the box to say the zoo can claim gift aid, can you use these to increase your 20% band?

http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm

The main thing is gift aid only works when you go over the lower rate and are paying 40% it just extends it i dont think in the exam it goes into any more depth than that

meibaker

hi, thanks everyone for your answers! oop,totally forget about the personal allowance!

very appriciated guys, have a nice weekend!
regards may x

coojee

A-Vic wrote: »

http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm

The main thing is gift aid only works when you go over the lower rate and are paying 40% it just extends it i dont think in the exam it goes into any more depth than that

Great, thanks for that link. I wasn't aware of this. I'll keep records of everything in the future so we can get a few pence back on DH's gift aided donations.