Self Assessment - Charitable Causes

Discussion in 'Accounts & Finance' started by Matthew McCabe, Jun 12, 2019.

  1. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

    13 0
    Hi,

    My wife and I give a lot of money to church and gift aid it. My self assessment is asking me to declare this and it puts my tax bill up. Can we just assume for tax purposes that my wife makes those contributions? She earns more than me anyway...

    Matt
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #1
  2. SteLacca

    SteLacca UKBF Ace Free Member

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    No, you cannot change the facts. If they were joint contributions then that's what they were.

    I assume that you are a non-taxpayer, which is why you get a tax liability from them. The solution, don't gift aid your contribution, and don't try to claim tax relief for it.
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #2
  3. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

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    Sorry, what do you mean by "non-taxpayer"... I do pay tax, that's why I'm doing a self assessment.
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #3
  4. SteLacca

    SteLacca UKBF Ace Free Member

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    In that case, charitable donations do not increase your tax liability - they reduce it.
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #4
  5. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

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    OK- I use Freeagent accounting software and when I add a value for charitable contributions my tax liability goes UP!?
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #5
  6. SteLacca

    SteLacca UKBF Ace Free Member

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    The only time that charitable donations would increase your tax liability would be if you have gift-aided the donations but have insufficient tax in charge to cover the gift aid. e.g. if you are a basic rate taxpayer and pay tax of £150 in the year. You make a charitable donation using gift aid of £800, the gift aid represents £200. In those circumstances, your tax would increase by £50.

    If you had paid tax of £300, and were a higher rate taxpayer, then the gift aid would reduce your tax liability. (For a basic rate taxpayer, whilst you need to declare it, it has no net effect on your tax other than where you have insufficient tax in charge).
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #6
  7. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

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    I suspect I don't have sufficient tax to cover it but my wife certainly does - so how does this work?
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #7
  8. SteLacca

    SteLacca UKBF Ace Free Member

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    Have your wife make the donations herself rather than joint.
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #8
  9. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

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    I.e. pay donations out from a bank account solely belonging to her?
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #9
  10. SteLacca

    SteLacca UKBF Ace Free Member

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    It doesn't really matter whether they are paid from a joint account or not, but if the funds in the account cannot be attributed then it may give HMRC an opportunity to challenge.

    Separate, discreet donations will remove the HMRC opportunity.
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #10
  11. Matthew McCabe

    Matthew McCabe UKBF Newcomer Free Member

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    Ok thanks. What steps do we need to take to ensure they are separate and discrete. We simply do a bank transfer to the church and other charities...
     
    Posted: Jun 12, 2019 By: Matthew McCabe Member since: Jun 3, 2018
    #11
  12. SteLacca

    SteLacca UKBF Ace Free Member

    1,317 261
    If the gift aid declaration is made on paper etc. then make sure it's only in your wife's name.

    To be honest, HMRC are more likely to be interested that the charity is complying with its own obligations, unless you are making ridiculously large donations.
     
    Posted: Jun 12, 2019 By: SteLacca Member since: Jun 16, 2016
    #12