Any UK users set up MD for 'Gift Aid'

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red

08 Dec, 2019 12:31 PM

I'd like to be able to track the 25% the Government gets from any charitable donation I make using Gift Aid. Ideally so I can be sure that the amount 'Gift-Aided' is less than the Income Tax I've paid.

I've cobbled together a report which does it (just) but it's a bit clunky - involving a dummy account where I show the 25% and whcih I then reverse out (as it's not 'real' money in my account). Then use category and tag filters to show the amounts.

Is there an easy/obvious way? It's not earth-shatteringly critical, and I'm using it as a mental exercise to play with Moneydance :)

Thanks

Alasdair

  1. 1 Posted by dwg on 08 Dec, 2019 07:28 PM

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    I'm a fellow user.

    Perhaps a split transaction with a specific category set up would work for you.

    The setup I am thinking of would be a category called Gift-Aid with two subcategories under it; Gift-Aid - Tax and Gift-Aid - Less Tax.

    The transaction you post would then be a split. The gross amount of Gift Aid split between the Tax and the Less Tax categories.

    An Income & Expense report would then show the gross amount and the two categories under it if you use the summary version of the report or all items if you use the detailed version

  2. 2 Posted by red on 09 Dec, 2019 09:38 PM

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    Thanks dwg. Had a play and based on your suggestion have created 2 categories. An Income (the 25% HMRC add) and an expense.

    There has to be both to balance out that it's not real money in my account. I then just include the income one in a report with all the other standard tax bits. So in the report I see 'income' of the 25% of the donations (plus any tax refunds should I be so lucky!) - then the expense bit shows all the PAYE income tax deductions.

    So long as _I_ understand it, then it sort of works! :)

  3. 3 Posted by red on 09 Dec, 2019 09:41 PM

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    I should have added, the transaction on the (e.g.) credit card has three splits: If the actual, real donation is £100, then there's a split line for £100 with the category 'Charity' - then an income split line for the '25% gift aid bit HMRC add' for £25 with the 'income' category above then a third for the same amount as the expense, so the total for the transaction on the credit card is the £100.

  4. 4 Posted by dwg on 09 Dec, 2019 10:03 PM

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    I think I would need to see a screen shot of the split to understand what you are doing, but it does not sound like what I was quite intending.

    I was thinking of a category structure like:

    Charity
      Gift Aid
      Gift Aid Tax

    The credit card debit totaling 100 I was thinking of a being Gift Aid 75 & Gift Aid Tax 25.

    In reporting the total of 100 will be shown against Charity as MD will add the subcategories together.

  5. 5 Posted by dwg on 09 Dec, 2019 10:09 PM

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    BTW using splits there are a number of ways of doing this

  6. 6 Posted by red on 10 Dec, 2019 12:13 PM

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    Ah, but if I donate £100 to the charity, the _Government_ add the £25 and that goes direct to the charity. However, I want to record that element in my MD account.

    But I never actually see the £25. Hence why I show it as a 'ghost' income which has another paired expense so that my account never shows it as part of my Net Worth. I just want to see £100 to charity and then the 'ghost' £25.

    The point being that if in any year I pay zero income tax, I cannot make any gift-aid donations at all as I have paid no tax.

    I can only make gift-aid donations where I have paid MORE in income tax than the 25% the Govt adds.

  7. 7 Posted by Mike Bray on 10 Dec, 2019 02:37 PM

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    How about this?

    If you add an entry for £100 and split it £75 to the charity and £25 to gift aid MD records £100 against your account which is wrong.

    Instead create an account called HMRC Gift Aid. Record the transaction as normal, i.e £75 paid to your charity and then record a separate transaction from your HMRC account to your charity, ie the £25. You end up with:

    Credit card -£75.00
    Charity +£75.00
    HMRC Gift Aid -£25.00
    Charity +£25.00

    The last thing your need to do is exclude the HMRC Gift Aid account from you networth report.

    Over time you will track how much Gift Aid you have donated. If any transaction gets invalidated because of insufficient tax paid you can delete the transactions.

    You do not have to enter the Gift Aid transactions at the time of incurring the cost. It can be done at any time.

  8. 8 Posted by dwg on 10 Dec, 2019 07:39 PM

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    Ahh so the 25 is a Government top up, that is not what I was thinking it was (I'm used to governments only taking money).

    I agree with Mike that if you gain any benefit from it then it needs to be shown in Moneydance in such away that the benefit shows correctly.

  9. 9 Posted by dwg on 10 Dec, 2019 07:51 PM

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    I do not know if this approach would do what you want but it may give some ideas.

    I receive some Tax credits for corporate tax pad on some dividends as I need to track these amounts and report on them. I do it via 2 categories - these credits do not really change my net worth just impact the tax I need to pay. Hence on the Expense side I have created a category call Imputation Tax and on the Income side one Called Franking credits (the names are significant locally) and I perform a transfer between the two categories for the amount involved.

  10. 10 Posted by red on 10 Dec, 2019 08:00 PM

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    Thanks both - they were the two approaches I had thought of. I think I prefer the one which does it all via categories, to avoid having a 'dummy' account floating around!

  11. 11 Posted by Mike Bray on 12 Dec, 2019 11:55 AM

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    Hi @dwg

    In the UK you can claim charitable donations as an offset to tax. If you Gift Aid it then you give up the right to claim this offset. Instead the Charity receives the tax relief as an extra donation. You as an individual never see the money, it is not part of your net wealth. @Red if I understand it correctly wishes to track this money. Tracking the Gift Aid allows you to calculate your total donations to charity. The approach of using an account shows how much the Government has donated to your charities and allows you to keep it outside your net worth. I am not sure you can do this with Categories as the other side will be against one of your account and thus will be included in the net worth.

    Mike

  12. 12 Posted by dwg on 12 Dec, 2019 12:16 PM

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    Hi Mike,

    Here we can only claim charity contributions as a Tax Deduction.

    In Moneydance you can do a category to category transfer so you do not need to use an account.

  13. 13 Posted by Mike Bray on 12 Dec, 2019 12:49 PM

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    That will work as well, not something I have considered doing.

    Sent from Mail for Windows 10

  14. 14 Posted by dwg on 12 Dec, 2019 07:53 PM

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    When I started using Moneydance I wanted to keep everything in one place rather than having heaps of separate files, I have not achieved my goal as yet since Moneydance lacks some investment actions I really need but have gone a long way.

    One of the things I wanted to achieve was to have everything I needed for Taxation reporting in one report, with Reckon I would have to take the data from it and plug it into one or more spreadsheets. With Moneydance the Taxation reports I receive from various investments I enter the data from by using category to category transfers in the appropriate account thus meaning I get an Income and Expense report that gives me much of the data I need, capital gains are still separate but they are so country specific it would need Moneydance to have a report writer to deal with them but at lest I can have the raw numbers in MD.

    I still need to have spreadsheets for Investments (especially for RoC transactions) but at least I can store them in the Moneydance Data set structure.

    As I started using Moneydance before Tax Date usage was available in many reports. I have used the principles of Accrual accounting to assign payments to the correct time period notwithstanding that they are often paid in a different one, and to facilitate this I use a category like you would an account, even having it visible and usable from the side bar.

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