Last week we highlighted changes to the taxation of interest income from 6 April 2016. These changes together with changes to the taxation of dividend income, also from 6 April 2016, mean that some individuals will no longer pay tax…good news!
However, this can have an adverse impact on those who also make regular donations to charity under gift aid.
If you make donations under gift aid you must pay sufficient income tax to cover the amount that the charity reclaims, equal to 25% of the cash that you donate. If not then then you have to make up the shortfall to HMRC.
As a result any individuals who are paying a small amount of, or no, tax should consider carefully whether to sign gift aid declarations for any new donations and whether they should withdraw existing declarations for ongoing donations.
For more information, please contact Lesley Sutton on 01484 550037 or email email@example.com.