Forum

• # 78430
• Tue 17 Jan 2012 11:20 PM

I have a client who has paid about 3,000 to charities in 2010/11. Are they going to be classed as expenses on her return? Are cash payments automatically called 'gift aid payments', because the return has a section for that. If that is the case I can enter all of them in but they are still no coming off her Net Profit Am I missing anything here with charity payments
Advice appreciated.

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• # 78447
• Wed 18 Jan 2012 11:09 AM

Hi,

I think payments to charity under Gift Aid and payments to charity not made under Gift Aid are treated differently.

Donations not made under Gift Aid to:
          a local charity are allowable expenses if they are wholly and exclusively for trading purposes
          a National charity are not allowable

Charitable donations made under Gift Aid are not allowable when preparing the adjusted trading profit, because they are treated somewhere else in the tax computation.  I think these are treated as net payments and for a basic rate taxpayer they are ignored in the income tax computation. But for a higher rate and additional rate taxpayer the basic rate band is extended by the gross donation.  

I hope it helps.

Kind regards,
Flo

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