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Gift aid

Gift aid

Sole trader wants to give £1000 to a registered charity.
Not dealt with this before but I presume this will be seen as drawings in the accounts and entered in 'Gift aid' slot of the SATR.
Are there any special forms for dealing with this to ensure the charity receives the basic rate tax paid.

Alan Wraith


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By dtweats
09th Aug 2005 12:41

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The charity should provide your client with a simple form on which he/she will declare that all donations to that charity are to be gift aided. I understand that the charity will then claim back the tax. At 28p in the pound it can be quite a lot of money.

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09th Aug 2005 21:52

Other advantages
The £1,000 is regarded as a net payment after deduction of tax at 22%. £1,282 is the gross payment and you should make sure that the client has a tax liabilty that includes £1,282 due at the basic rate or more.

Nevertheless the net £1,000 should be entered on the self-assessment tax return. If the client pays tax at 40% on £1,282, then he or she will benefit by £1,282 @ 18% = £231.

In addition if any Child or Working Tax Credit claim is relevant, the £1,282 is a valid deduction and could lead to a useful increase.

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