Accountant - free advice here!

[MamaDalton27]

I’m a fully qualified accountant working at one of the big 4. Got a bit of a quiet afternoon and I know accountants aren’t cheap so thought I’d see if anyone had any questions or wanted any advice?! Ask away and I’ll do my best to help!

Hi - you can claim back some tax relief but not the full amount. You can claim back the difference between the tax paid and what the charity got.

eg

£300 with gift aid is £375

If you’re a 20% tax payer you claim the following:

£375 x 20% =£75.00

or if you’re a 40% tax payer it would be:

£375 x 40%=£150.00

I’ve paid £250 to an online accountant recommended by a friend, all the local accountants aren’t taking on more work. I need help with my tax return. He doesn’t seem to know what he’s doing - he seems as confused as me which doesn’t give me much faith! I’m a partner in a (very small) business and he keeps saying why do I get paid monthly if I’m a partner, I should just take a share of the profits…….. do you have any idea what he’s on about? I need a monthly income mate!

I’m concerned about a lot of the advice on here, as a Big 4 accountant.

You talk about having always worked in industry, but are reeling off answers to questions that are personal tax questions (which unless you’re in the very niche team of private client tax in the Big Four you will have no practical experience of dealing with) and you’re also dabbling with financial advice which you’re almost certainly not regulated to provide.

You might be trying to be helpful but if your professional body and indeed employer knew you were doing this you’d likely lose your accreditation and job.

Absolutely not the case.

Please see my last post and please stop posting about things that have nothing to do with your job and that you’ve likely not seen since your (non tax specialised) exams.

There is no tax benefit for a basic rate payer making a gift aid donation. The tax they have paid on their donation just goes straight to the charity. The only benefit is if you are an additional or higher rate payer and your bands will be extended such that you pay tax on more income at 20%.

I’m still fully ACCA qualified all this stuff I learnt and keep up to date with via CPD I’m hardly making it up as I go along. I very much doubt I’d lose my job and accreditation for giving FREE advice that nobody is obligated to follow, a quick google to verify anything I’ve said would confirm it.

I’m not charging anyone - just trying to be helpful

If your shares are all the same class, they will “pool” for tax purposes (it’s called a s105 pool).

You broadly need to add all of the costs together (and costs will include any amounts you had to pay income tax on when you received the shares). Then you work out what proportion of your shares you are selling (ie if you have ten and are selling 2, that’s 20%) and you can bring that proportion of the total cost into the CGT calculation as a deduction.

Despite what PP said it’s EXTREMELY unlikely that they’re exempt from CGT, particularly if you can just sell them at will.

This is for Mama Dalton please. I'm an OAP who has been asked to pay £420 after an online tax accountant did my return. But he says I cannot deduct the £300 I made in charitable donations as an expense! I thought I could! please can you explain?

You’re giving incorrect tax advice and my Big4 employer would absolutely sack me if I was giving free and wrong advice on the internet. And I would be disciplining my staff if I knew they were doing that.

I’m both astounded and concerned you don’t even see the issue with this. You will never see me posting on here giving accounting advice or R&D tax advice as despite these being part of my qualifications, I don’t practice in these areas so know that I’m rusty at best. So leave the personal tax advice to those who know what they’re doing.

Mama Dalton has answered this incorrectly, I’ve corrected her post above.

I think there’s another thread about this too where you’ve received correct advice.

Here’s my quick Google to show that people have got a better chance of getting the right answer out of AI than this thread as what you’re saying cannot be verified:

Personally I’m not sure if I would declare it at all. I know that’s against the rules though

Your Big 4 employer and ACCA are unlikely to be happy that you have stated that you would commit tax evasion

And your advice re charitable donations is incorrect as a pp has already stated.

Sorry this was wrong!

You can get this relief but only if you’re a higher rate tax payer! I’d just woke up 🙈

Maybe don’t do an AMA then? Yikes!

@MyFaceIsAnAONB hopefully someone who knows more will come along to help you. But I think he means that you will be taxed on your share of the profits of the business, not on the amount that you’re taking out each month.

Is your business a general partnership or LLP? I ask because some people say they're a partner in a business when they actually mean shareholder/director of a limited company.

Can you confirm that your monthly income is not salary via a payroll?

Im concerned about this thread as there has been some completely incorrect advice given as pointed out by pp. OP also shouldn't be advising that they wouldn't bother declaring £3000 a year extra income as they have done earlier in the thread.
To come on here and announce that you have professional qualifications but go on to give really bad advice is not great. There are people on here who may be in vulnerable financial situations taking what you are saying as gospel. You could be anyone. I really dont think this thread is appropriate.

Not only that, the relief you’ve said they’d get as higher rate tax payer is also wrong.

But I’ll take this as an apology for the post where you replied to me to say you weren’t making it up, you knew all the answers because of your CPD and a quick google would prove you right. People who are actually qualified to advise on these things would know the answer to basic questions like this in their sleep.

And you have an obligation not to bring your profession into disrepute. At least two of the replies you’ve given here do that - by giving away free advice (which is a terrible idea in any event) that’s incorrect and encouraging illegal tax evasion.

It’s not wrong.

I am qualified - I literally said in the post I would do my best to help, that’s it, I never said anything about knowing all the answers I doubt very much that’s true of anyone!

Just trying to be helpful with no ulterior motive and get slated for it 🙄 I won’t be replying on here again

Can you quote a source that says you get 40% tax relief on a gift aid donation?

Gov website

That literally says 20%. Which is the relief you get.

Your calculation says a £300 donation saves a higher rate tax payer £150 in tax. It doesn’t, you save 20% of the gross amount, so £75. So your £300 donation costs you £225 and the charity gets £375.

I said you can claim the difference?

But you also said:

If you’re a 20% tax payer you claim the following:
[redacted as acknowledged incorrect]

or if you’re a 40% tax payer it would be:
£375 x 40%=£150.00

What did you mean by this, to the lay person who already doesn’t understand gift aid? Because it’s a leap to expect them to understand that of the £150 you quote, £75 goes to them and £75 to the charity when you’ve clearly stated they can claim £150 as a 40% tax payer.

It’s the tax you paid figure, granted the explanation isn’t very good!

It's not that the explanation isn't good it's wrong. If a client asks you how much tax they will save when making a donation they want to know how how much tax they personally would save.