General Chat

I've been sending in self assessment returns (at HMRC request) since I retired.
Early this year I had a letter from HMRC saying I didn't need to do it any more.

But the reason I've been doing it is to claim relief on Gift Aid and a couple of other bits and pieces so if I stop I won't get the several hundred pounds tax refund that I normally get.

I count this as dodgy practice by HMRC and wonder how many people will be caught out and not get a refund they are entitled to?

Quite a few, in all probability. It's a right faff even if you know you dont owe anything nor due a refund. Many people would give a sigh of relief if they were told they didn't have to bother.

If you are claiming tax relief on gift aided donations that implies you are a higher rate taxpayer. However, if you are not required to send a tax return, contact HMRC and ask for a P810 form. You’ll need to submit it by 31 January after the end of the previous tax year.

What other relief are you claiming for?

Are you sure about the higher tax band, IGP?
My accountant puts my gift aid on the form and my income is within the personal allowance.

Whilst you can record gift aid donations you have made on your return, you will only receive a tax refund if you pay some of your tax at the higher rate when you can claim the difference between the rate you pay and basic rate claimed back by the charity on your donation.

For basic rate tax payers, any refund would be zero.

Does it need to be declared so that the charity can claim tax from the government. or is it only necessary if you are a tax payer? TBH, I'm :-S

For a charity to claim Gift Aid on your donation you must first have paid UK Income or Capital Gains Tax that financial year.

The tax you pay must be equivalent to the amount of Gift Aid the charity will reclaim on your donation that tax year.

You then need to fill out a Gift Aid Declaration form. This is a statement from you to the charity confirming that you want to donate through Gift Aid and for them receive tax back on your donation. You are also confirming that you are a taxpayer.

It is this declaration that the charity uses to claim from HMRC.

If you pay less tax in a year than the amount of Gift Aid claimed on all of your donations it is your responsibility to pay the difference. In practice, if HMRC does discover this has happened, they are likely to claim the money back from the charity.

Thank you - that clears that up.

Coming back to BrianW's OP - does that mean that even as a basic rate taxpayer, he needs to declare it on a Return?

Sorry - its all a bit of a mystery. I was aware that the rules have changed in the last few years, but not the detail.

My income is also within the personal allowance, but until this year I was having tax deducted from investment income. So each year, after I had received all the interest statements, I sent them off to HMRC with my P60 and a covering letter to get a tax refund.

Now that all my interest is being paid without deduction of tax, I don't need to bother any more.

I used to work for the Revenue, but I retired so long ago that I am reluctant to give any advice. One thing that always surprised us though was the number of people who expected to get a tax refund even though they paid no tax. A refund is just that - giving you back tax which, for whatever reason, wasn't due. It is not a freebie from the government.

With gift aid you only actually save tax if you are a higher rate taxpayer as the effect is to increase the basic rate (20%) band allowance by the gross amount of the payments you make under gift aid, thereby decreasing the amount charged at 40%.

Well, I filled it in online and submitted it last night.

And I'm due a refund of £773.25.

Nuff said !!!!!

there are quite a lot of dodgy practices that go on which HMRC either don't want to or are afraid of nailing down.

A favorite - which was used to set up seed corn capital by quite a few high profile low life characters name no names - is carousel VAT fraud which does indeed revolve about claiming tax which was never paid, the perfect refund.

https://en.wikipedia.org/wiki/Missing_trader_fraud#Example

there are too many more to list the present HMRC haven't got a clue so they focus on some poor guy's expenses or as Brian says low levels of gift tax. High levels of gifting are another story.

It is def an organisation not fit for purpose.
If all else fails they now have the power to levy tax AND grab it on their own evidence. The vuictim can become bankrupted and homeless for all they care as HMRC ( as with DWP ) have their own internal court.

The inability of the HMRC to collect tax is the primary reason for all the cuts not some imagined financial crisis or DWP shelling out too much.

Well done getting a refund like that.

Sadly not too many people who read this message board are in the position to have income in excess of £43,000 and are able to make gift aided donations of £3,093 each year.

Sadly, IGP, it's more to do with too much tax deducted from a pension rather than being in the 40% tax bracket.

Detective.

As Brian has said, the mechanism used by HMRC is to increase the band at which the higher rate kicks in (£43k) by the gross amount of your donations, thereby reducing the amount of tax you pay, but this is all rather academic if your income is below the higher rate threshold.

HMRC may prefer you to show any donations but I don't believe there is any compulsion to include them if you are not a higher rate taxpayer.