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2017 SA TR - foreign dividends and gift aid

Does anyone know if the tax paid on foreign dividends counts as "tax paid" for gift aid relief?

Hi I have a client who has a pension plus UK & foreign dividend income and in addition has paid £1,600 of gift aid. I was not expecting there to be any tax due but my software is calculating that the gift aid paid is not covered by "tax paid" so is charging it to my client. Shouldn't the foreign tax suffered on the Australian, fully franked dividends, be used as tax paid for gift aid purposes? Do I need to do something different this year now that notional tax credits have ceased? Or is it correct and the tax is due. I cannot seem to find any guidance on this quirky situation so any help would be appreciated.

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By stratty
22nd Aug 2017 17:38

I would say no. Whenever you sign a gift aid declaration it asks if you are a "UK" tax payer.

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22nd Aug 2017 18:06

Your software is correct. The foreign tax went to the ATO so if your client has not paid any UK tax then he must do so now to cover the relief granted the charity on the Gift Aid.

The Gift Aid declaration form would have included text along the lines of: "I am a UK taxpayer and understand that if I pay less Income Tax and/or Capital Gains Tax in the current tax year than the amount of Gift Aid claimed on all my donations it is my responsibility to pay any difference."

So if the client has no UK tax liability then he must pay the tax relief back to HMRC as calculated by the software.

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By hazy..
to Tim Vane
22nd Aug 2017 19:53

Thanks for your prompt reply......would a FTCR be the way round this then?

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to hazy..
23rd Aug 2017 09:00

I don't see how. Anything that reduces the UK tax liability below the tax required to be in charge to cover the gift aid will, effectively, be ignored.

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23rd Aug 2017 09:08

The statutory reference is s424 ITA2007; note in particular ss3.

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