Chartered Accountants and Professional Business Advisers

Pay attention to gift aid declarations

Donors could find themselves facing an unexpected tax liability as a result of tax changes applying from 6 April. When a donor makes a gift aid declaration, the charity is able to reclaim basic rate tax on the amount given and, if appropriate, the donor can claim tax relief at the higher rates. However, the donor’s tax liability for the year must exceed the charity’s reclaim and if it doesn’t, HMRC can ask the donor for the shortfall.

The combination of the increased personal allowance, the 0% starting rate on up to £5,000 savings income, the new savings allowance and the change to the tax on dividends from April means some donors don’t actually have a tax liability and therefore can’t add tax to the gift without getting a bill from HMRC!

Charities may need to amend their gift aid declarations to explain this, as from 5 April 2016 those that do not will be invalid.

Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above. If you would like advice or further information, please speak to your usual Shipleys contact.

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