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I have just come across an example done on chapter 2 for gift aid payments where gift aid reduces your net income and increases your basic rate band? Maybe I am missing something but it seems like there is a double benefit arising from this?
Thanks for all the great study material
In a working, grossed up gift aid donations reduce your net income to arrive at ‘Adjusted Net Income’ (ANI) for the purposes of potentially tapering the PA and calculating the child benefit tax charge. They do not reduce your net income in the body of the IT comp (so don’t reduce taxable income). The other effect is that the grossed up gift aid donations increase both your tax bands (£37,700 and £125,140) so that more income is taxed at lower rates and less at higher rates, resulting in a tax saving.
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