Don't get egg on your face over gift aid (From Lancashire Telegraph)

Don't get egg on your face over gift aid

3:14pm Monday 17th November 2008

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Tony, our accountant hero, faced his most dreaded day of the year. For Tony, it wasn't the Budget, or even the tax deadline of 31 January - no, it was Children in Need day.

All his colleagues dressing up in spotty shorts or 'way out' ties. Whilst Tony thought himself as full of fun as the next man, he often felt that it was a shame the next man was also an accountant.

There was nothing else for it, but to pop out and see some clients. At least then he could get some peace. Tony called Eric Pemember. 'I will be driving past your site in about half an hour, Eric. Are you free for a coffee? 'Pop in Tony – it will be good to see you'

'Good to see you' was the last thing that Tony thought, when on arriving at the Pemembers building, he was confronted by Eric Pemember dressed as a chicken and waving a bucket in his face.

'Come on Tony, you accountants can afford to give a lot – it's all for the kids you know'. Tony reaches into his pocket for his wallet – 'now make sure it's a blue one, Tony - don't be cheap'. Tony thinks that if Mrs Tony wants to be giving more this evening he will be reaching for the phone socket!

'Actually Eric – have you got the gift aid form to go along with this?' 'No – sorry Tony, we haven't printed them off. Anyway, it doesn't make any difference – most of my employees are basic rate taxpayers, not rich people like you!' 'Well, Eric - that's where you are wrong'. Gift aid is just as valuable to the charity when paid by a basic rate taxpayer – they get another 28% back from the government. What you're talking about is getting a reclaim for you – that only applies to a higher rate taxpayer. Similar rules apply for local sports clubs – donations to these can be treated in the same way.'

'Now you mention it, I have agreed to write off the amount I have lent to the scouts. They are a charity – don't forget to put it on my tax return!'

'NO' Tony exclaims (so loudly in fact, that he thinks for a moment that Eric the chicken may actually lay an egg!). 'Writing off a loan is not a payment for gift aid – you must either get the loan repaid and donate the money, or offset it under a deed of release'. 'Glad we spoke today – Tony. You have saved me having egg all over my face!' Eric laughs – but Tony groans.