Gift Aid & Pension Contributions - help please

bluesky Registered Posts: 8 Regular contributor ⭐ ? ⭐
Hi there

I am studying the 2 tax modules from home, as stand-alone units, am taking the Personal Tax exam tomorrow, & I wondered if anyone could help me with Gift Aid/pension contributions.

When someone makes a Gift Aid donation/pension contribution, is the gross figure always deducted from employment income before the personal allowance is calculated, or does this just happen if the total income is more than £100,000?

I thought it was only if the income is more than £100,000 but I'm getting a bit confused.

Thanks very much


  • Monsoon
    Monsoon FMAAT, AAT Licensed Accountant Posts: 4,071 ? ? ?
    I don't remember anything to do with £100,000 (but that's hopefully because things have changed and I don't remember the change!)

    However: gift aid and personal pension contributions will have the effect of extending the basic rate band, meaning someone who is a higher rate taxaptyer will pay 20% tax on more of their income. I know of no situation where you'd deduct these payments off employment income (and I'm expecting therefore the answer is "just if more than £100" as something to do with the reduction in PAs for higher earning individuals).

    Employer pensions get deducted off gross salary before PAYE and NI is calculated and thus tax relief is obtained at source.
  • bluesky
    bluesky Registered Posts: 8 Regular contributor ⭐ ? ⭐
    Hi Monsoon

    Thanks for your reply - I've read through my text book again & think I understand it now. It is to do with reducing the PA for a higher-rate tax payer.

    I think I need to stop revising for a while - my brain is turning into mush!

    Thanks again
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