Payments to Charities
T.C.
Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙♂️
I am confused. I don't deal with large charity payments as a rule, but I have a client who has made below the personal allowance in profit, but has given £1850 to charity. When I calculate the tax, it says that the client has to pay tax on this - £462. What is the point of declaring it on the tax return then??? Help appreciated.
0
Comments
-
Taken from HMRC website
"Making sure you’ve paid enough tax to use Gift Aid:
You can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you’ve paid for the tax year in which you make your donation is at least equal to the amount of basic rate tax the charity [....]
How to check if you’ve paid enough tax
To work out if you’ve paid enough tax to cover your donations, divide the donation value by four. For example, if you give £100 in a particular tax year you will need to have paid £25 tax over that period. (£100/4 = £25). (Note that this calculation is based on the basic rate tax of 20 per cent)
If you don’t think you've paid enough tax this year, you may be able to carry back your donation to the previous tax year."
In short, if your client has gift-aided their charities' donation, it means HMRC is "giving away" an extra 25% from your tax. If you don't pay tax, you have nothing to give away.0 -
Now it makes sense! Thank you!0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership