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Higher allowance could increase tax demands


Higher personal allowances that come into effect in April could result in unexpected tax demands for some people. The quirk relates to the Revenue’s stance on Gift Aid, which enables charities and amateur sports organisations to reclaim £2.50 for every £10 of eligible donation. Tina Riches of Smith & Williamson states: “HMRC is tightening up on Gift Aid… Donors may have been taxpayers in the past, when the Gift Aid donations were first set up, but subsequently become non-taxpayers. People who are currently taxed on savings interest or investment dividends may fall into this trap, particularly if they make donations by standing order or direct debit and so may not be making a conscious decision about them.” The LITRG is calling on HMRC not to pursue individuals for tax due on donations they make under Gift Aid, saying it would be fairer for reimbursements to come from the charity. HMRC stated: "Gift Aid is a tax relief, so people whose income is covered by allowances should not make their charitable donations under the Gift Aid arrangements.”

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