Charity Donations

[Richlist]

Does anyone know if donations to charity from rental income is tax deductable ?

[Carryon Regardless]

I can't be sure here, but don't the charity organisation usually recover our tax paid on top of the donation later,

[Grampa]

I,m fairly sure it is when i put it through my buisness so I dont see why not for rental income. But I dont know for sure.

[Richlist]

Well the issue can be quite complicated......rental income for people not trading as a limited company is viewed by HMRC as investment income and added to any other income from PAYE or self employment.

I have always 'thought' that donations to charity could not be offset against rental profits but recently I have had call to question my position on that point.

[Richlist]

I can't be sure here, but don't the charity organisation usually recover our tax paid on top of the donation later,

Thats true if you register for Gift Aid......the charity can claim back the 20% tax on top of the donation.

But if you are a 40% taxpayer you can normally claim back the other 20% for yourself on the self assessment form.......I just need to know .....when the charity donation is made from rental income wether I can offset the donation as a business expense.

[Chestnut]

RL, You ask- is rental income paid to charity tax deductable?

I would not think so, as there are already two HMRC systems that enable tax recovery from payments to charity.

1) Gift Aid (as you correctly explain) - I use this - my rental income is assessed for tax as part of my total income.

2) Donations by a business can be offset from its corporation tax. I don't know how this works as I'm not a 'business'.

(1) covers individuals and sole traders, like me; (2) covers businesses. What other categories could there be?

[Richlist]

my rental income is assessed for tax as part of my total income.

Agreed.....but you are entitled to deduct any expenses from that rental income before its assessed for tax. So, if I've made a donation to charity specifically from my rental income I'd like to know wether that expense is an allowable expense against rental income.

If I made the same donation from my non rental income......irrespective of Gift Aid.......I'd still be able to claim tax relief on the donation as I'm a 40% tax payer.

[Chestnut]

RL,

On HMRC self assessment form which I use, rental income is added to other income to calculate tax payable and under rental income section (box 6) donation to charity does not appear in list of allowable expenses. Gift Aid payments are declared in box 8. However in GA notes it says HMRC calculates tax relief for 40% and above tax payers.

Also mentions Gift Aid reducing tax bill if over 65 - something new for me to enquire about - thank you for that!!

See self-assessment notes http://www.hmrc.gov.uk/worksheets/sa210.pdf

[Richlist]

under rental income section (box 6) donation to charity does not appear in list of allowable expenses.

That list of allowable expenses is not definitive.......no list ever is and certainly HMRC have never provided a complete list anywhere. The fact that charity donations are not on that list does not in itself mean that they are not an allowable expense.

However in GA notes it says HMRC calculates tax relief for 40% and above tax payers.

Yes its always been the case.......you declare your total income and total expenses and HMRC calculate your tax on what is left, taking allowances into effect.