Comments

  1. avatar says

    Hi Sir,
    Is small donations to local charity deducted from savings income, if thats the only source of income i have?
    And also another question sir wanted to clarify, correct me if am wrong, we can deduct donations to local charity from trading profit relating to individual, right?

    I would highly appreciate for your timely response.

  2. Profile photo of Chris says

    Hi Sir,

    as well as increasing the basic rate, higher rate and 45% rate tax bands by the amount of GROSS gift aid we also deducted the gift aid (and pension payments) from the total income within the year.

    I can’t seem to get my head around why this is, if you are increasing the income tax threshold bands?

    Any explanation to help with my query would be great. Thank you. Chris.

    • Profile photo of fabiangrey says

      We only increase the Basic (20%) and Higher (40%) Rates by the Gross Gift Aid amount (there would be no point in increasing the Additional rate).

      However we can only do this once we have deducted the Gross Gift Aid (GGA) amount from the ANI Figure (ANI = Net Income Less both Gross Personal Pension Contributions & Gross Gift Aid Payments)

      Say Gross Gift Aid is 3,000 & Ani is 90,000.
      (ANI – GGA) 30,000 – 3,000 = 87,000.

      We then add the GGA to the Basic Rate Maximum Amount.
      32,010 + 3,000 = 35,010 (W1)

      Therefore the Tax Calculation is as follows:
      Non-Savings
      (W1) 35,010 x 20% = 7,002
      (ANI of 87,000 – 35,010) = 51,990 x 40% = 20,796

      Therefore Total Tax Liability = 27,798

      (I hope this makes sense and is correct)

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