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"Gift Aid" - any experts out there?

erictheone
Posts: 16
Joined: Sat Aug 15, 2015 12:22 pm

"Gift Aid" - any experts out there?

Postby erictheone » Tue Sep 12, 2017 3:11 pm

The HMRC website says:

" Paying enough tax to qualify for Gift Aid

Your donations will qualify as long as they’re not more than 4 times what you have paid in tax in that tax year (6 April to 5 April)."

My question is: what exactly does "paid" mean in this context? Let's say it was calculated that I owed £1,000 tax relating to the 2016/17 tax year, and I actually paid this to HMRC in June 2017 (so during the 2017/18 tax year).

Does that mean that in 2017/18 I can pay £4,000 under Gift Aid (the tax year during which the actual £1,000 cash payment to HMRC was made, even though it relates to tax liabilities accruing in the PREVIOUS tax year)?

I'm assuming this is not correct and the matching of the Gift Aid payment is made against the tax liability accrued, not necessarily paid, during the same tax year? So in my example, I could pay Gift Aid £4,000 during 2016/17 even though my £1,000 tax liability for 2016/17 is not actually paid to HMRC until a later date in 2017/18?

Sorry, difficult to explain clearly, but I'm sure there's an easy answer!!!

SteLacca
Posts: 278
Joined: Fri Aug 07, 2015 2:17 pm

Re: "Gift Aid" - any experts out there?

Postby SteLacca » Tue Sep 12, 2017 4:28 pm

No. It would be better worded to say "Paid for the year". i.e. 2016/17 donations must be supported by 2016/17 tax paid (or they will give rise to a tax charge).

AnthonyR
Posts: 185
Joined: Wed Feb 08, 2017 2:33 pm

Re: "Gift Aid" - any experts out there?

Postby AnthonyR » Tue Sep 12, 2017 4:29 pm

The £1,000 you paid relates to 16/17 not 17/18, so you needed to have made the donation in 16/17.

However, s.426 ITA 2007 allows you to treat a donation as made in the previous year. So you can make a donation this year, elect under s.426 to carry it back and HMRC will treat it as if it was a 16/17 contribution.
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

erictheone
Posts: 16
Joined: Sat Aug 15, 2015 12:22 pm

Re: "Gift Aid" - any experts out there?

Postby erictheone » Tue Sep 12, 2017 4:39 pm

Thanks to both SteLacca and AnthonyR for replies. So the matching is done on a normal accruals basis - a Gift Aid payment made today, for example, would be match against tax PAYABLE for 2017/18, even though that liability might not actually be PAID to. HMRC until sometime during 2018/19.

AnthonyR
Posts: 185
Joined: Wed Feb 08, 2017 2:33 pm

Re: "Gift Aid" - any experts out there?

Postby AnthonyR » Tue Sep 12, 2017 4:41 pm

Correct - bear in mind most people pay their tax on PAYE as they earn it. Only those lucky folk in self assessment get to delay their tax!
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

erictheone
Posts: 16
Joined: Sat Aug 15, 2015 12:22 pm

Re: "Gift Aid" - any experts out there?

Postby erictheone » Tue Sep 12, 2017 4:47 pm

AnthonyR wrote:Correct - bear in mind most people pay their tax on PAYE as they earn it. Only those lucky folk in self assessment get to delay their tax!


Yes, luckily I'm in that SA category right now!

SteLacca
Posts: 278
Joined: Fri Aug 07, 2015 2:17 pm

Re: "Gift Aid" - any experts out there?

Postby SteLacca » Wed Sep 20, 2017 3:28 pm

For those of us in the profession, it's generally considered a bad idea to rely on HMRC guidance (particularly on .gov.uk) since it is frequently misleading, and oftentimes plain wrong.


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