Gift Aid

[TheFaQQer]

In order for a charity to reclaim tax back when I gift aid something, I need to be a UK taxpayer and to have paid at least that amount of tax.

If I take low income and then dividends to take my to (say) £35k annual income, I would pay no tax. Does that mean that I can't tick the gift aid box any more, or can I still do it because of the tax credit for the dividends?

[Gonzo]

If I take low income and then dividends to take my to (say) £35k annual income, I would pay no tax. Does that mean that I can't tick the gift aid box any more, or can I still do it because of the tax credit for the dividends?

I don't think it is the case that you won't have paid any tax.

Don't forget the 10% tax credit that comes with your dividends, I think that counts.

[Clare@InTouch]

I don't think it is the case that you won't have paid any tax.

Don't forget the 10% tax credit that comes with your dividends, I think that counts.

Agreed - you have paid tax, even though that tax was effectively 0%.

Gift Aid relief: the requirement to pay tax

The individual must have paid at least as much income tax and/or capital gains tax (at any rate) as the basic rate tax the charity will reclaim on the Gift Aid donation, for the year of the donation. Tax deducted from investment income, including dividend tax credits, can be used to cover donations.

[TheFaQQer]

Thanks.

[Nixon Williams]

In order for a charity to reclaim tax back when I gift aid something, I need to be a UK taxpayer and to have paid at least that amount of tax.

If I take low income and then dividends to take my to (say) £35k annual income, I would pay no tax. Does that mean that I can't tick the gift aid box any more, or can I still do it because of the tax credit for the dividends?

Remember that if you do make approved charity donations, to enter them onto your tax return.

The effect of making charity donations 'extends' the amount that you can pay in dividends without hitting the higher rate tax, so for the current tax year (2011/12) you would normally start paying 40% tax when your total income exceeds £42,475 (£7,475 + £35,000).

So, say you have made donations of £1,000 - you can take this as extra gross dividend income, so a net dividend of £900.

I hope this assists!

Alan