Help with PTC question - Gift Aid
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I'm stuck on a question : John paid £390 net to a charity under the gift aid scheme in 2004/05 financial year.<BR><BR>£20,000 rental income (schedule A) less personal allowance of £4745 gives him £15,255 taxable income.<BR>Lower rate £2020 x 10% is £202 plus <BR>Basic Rate (£15255 - £2020 
£13235 x 22% = £2911.70<BR>Equals £3113.70 tax due to HMRC. The 22% gift aid amount will be claimed back by the charity from HMRC and there is no tax computation implication.<BR><BR>However, if he had received a £42,000 rental income (schedule A) - what tax would he be due to pay? I think it's the following but would like some feedback as we haven't had our books from college yet.<BR><BR>£42000 rental income (schedule A) less personal allowance £4745 gives him £37,255 taxable income. <BR>Lower rate £2020 x 10% = £202 plus <BR>Basic Rate (£29380+< £390/78*100=500 >= 29880 x 22% = £6573.60 plus<BR>Higher Rate £5355 x 40% = £2142 <BR>Equals £8917.60 tax due to HMRC<BR><BR>Many thanks<BR><BR>
£13235 x 22% = £2911.70<BR>Equals £3113.70 tax due to HMRC. The 22% gift aid amount will be claimed back by the charity from HMRC and there is no tax computation implication.<BR><BR>However, if he had received a £42,000 rental income (schedule A) - what tax would he be due to pay? I think it's the following but would like some feedback as we haven't had our books from college yet.<BR><BR>£42000 rental income (schedule A) less personal allowance £4745 gives him £37,255 taxable income. <BR>Lower rate £2020 x 10% = £202 plus <BR>Basic Rate (£29380+< £390/78*100=500 >= 29880 x 22% = £6573.60 plus<BR>Higher Rate £5355 x 40% = £2142 <BR>Equals £8917.60 tax due to HMRC<BR><BR>Many thanks<BR><BR> 0
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Help with PTC question - Gift Aid
Yes, that's the correct treatment.<BR><BR>For a basic rate taxpayer, there are no entries in the tax computation (so long as he/she is paying enough income tax and CGT to cover the tax element of the donation). This is because tax relief has already been given at BR - a gift of £500 has effectively been made, but only £390 has been paid. The charity would recoup the tax from HMRC.<BR><BR>For a higher rate tax payer, a small adjustment is needed to ensure that he/she gets full relief for the donation. The basic rate band is extended by the grossed up amount of the gift - in other words, £500 of income which would have been taxed at higher rate is now taxed at basic rate.<BR><BR>Andrew Harrington.0 -
Help with PTC question - Gift Aid
According to my FTC textbook it would be:<BR><BR>£42,000 - £4,745 PA = £37,255 taxable income<BR><BR>Basic rate tax band: £31,400 + (£390x100/78) = £31,900<BR><BR>Tax: £2,020 x 10% = £ 202<BR>£29,880 x 22% = £6,574 (£2,020 + £29,880 = £31,900)<BR>£5,355 x 40% = £2,142<BR><BR>Income tax liability: £202 + £6,574 + £2,142 = £8,918<BR><BR>So yes you are right! Thats pretty good going to say you haven't got a textbook yet. Its taken me ages to work it out even with mine?!<BR><BR>Sarah.<BR>0