Are you a "tax payer " if you don't earn much?

[OUB1974]

Sorry if this is a silly question. My husband and I are both low earners. I pay a small amount of tax each month (£30ish) and he pays none, although he earns enough for NI and pension contributions.

I'm not sure to what extent we are classed as tax payers? For example, I think I get tax added back on my pension contributions, and I'm fairly sure I can get more back than I've paid. Is this also true for my husband?

Also with charity contributions if they ask us if we're tax payers for gift aid, what do we say? Do we have to keep track of anything (it would take quite a lot of charity contributions to claim back more than my tax, but do I also have to take into account pensions so I'm not claiming the same back twice?). And can my husband say he is a tax payer (both paid through paye) if he doesn't pay any actual tax?

We don't claim any benefits as we have chosen to do fewer hours to spent more time as a family, plus we both have very flexible jobs with good hours and if we claimed then one of us would have to work more and possibly change jobs. But does anyone know the answer to this, and also if there are any other things we need to think about? Thank you

Not sure I can answer all your questions, but on gift aid. If you pay £30 a month tax, this is £360. You can only gift aid up to £360 of money or goods in that year. The tax you pay has to be at least the value donated

You can't claim a charity donation as being "gift aided" if you don't pay income tax. Well you can, but you have to pay to HMRC the tax which the charity have claimed back from them.

If in doubt, simply don't tick the "gift aid" box when you make your charity donations.

You are a taxpayer if you pay tax, whether you are a net taxpayer is a different matter.

What is the definition for?
Taxpayer as a legal construct depends on the context.

For GiftAid you need to pay enough tax for the charity to be able to claim.

The pension situation is a bit complicated because it depends what pension scheme you’re on.

If you have a personal or stakeholder pension then an extra 25% ‘tax relief’ will be added to it whether or not you have paid enough tax. So eg if you earn £10k a year, for every £80 you pay into your pension and extra £20 will be added. It doesn’t matter that you haven’t paid any tax - it’s added anyway.

But in traditional company pension schemes, the pension payments are taken off before the tax is calculated. If you weren’t earning enough to pay tax then you don’t get any tax relief, and if you only pay a little bit of tax then you only get a little bit of tax relief.

It’s a fundamentally unfair system.

You can read more about it here: www.litrg.org.uk/tax-guides/tax-basics/do-i-have-join-pension-scheme/do-you-know-how-tax-relief-your-pension

Here’s a useful paragraph from the link:

If you are a low earner (that is, if you earn below or only just above the personal allowance – £12,570 in 2021/22), you may wish to check which type of pension scheme you are in. If you are in a relief at source arrangement, the pension provider claims 20p tax relief back from HMRC for every 80p of your contribution received – no matter what the level of your earnings. This is subject to the points made above in relation to who can get tax relief.

If, however, you are in a net pay arrangement, you will not get any tax relief. Many people think this is unfair and there are growing calls, including by LITRG, for the government to change the rules.

Thank you so much everyone, that is mich clearer now. @TractorAndHeadphones that is exactly what I was getting at, thank you. I will keep an eye on any charity donations (we only have two set up for £100 per year in my name so ok for that), and will tell my husband to say no if he goes to the charity shop.

My pensions scheme seems the good sort as I get the tax added back! Will check to seeing my husband's is the same and pay any extra into a private one if not. It's all very complicated!