How to record Tax Relief outgoings (charity with Gift Aid + pension contributions)

Question asked by Paul Masri-Stone 3 months ago

I'm a sole trader and I'm new to ClearBooks. Just getting it set up for MTD and for my personal tax.

When I've completed my annual Self Assessment on the HMRC portal, there's a section headed "Tax Relief". In the Tax return these boxes are labelled:

Pension schemes

  • Box 1: Payments to registered pension schemes where basic rate tax relief will be claimed by your pension provider (called ‘relief at source’). Enter the payments and basic rate tax
  • Box 1.1: Total of any ‘one-off’ payments in box 1

Charitable giving

  • Box 5: Gift Aid payments made in the year to 5 April 20XX
  • Box 6: Total of any ‘one-off’ payments in box 5

I've already hooked up my bank accounts in ClearBooks to automatically grab the transactions that include these.

To be clear, these are personal donations, not part of the business, but they feature in the end of year Self Assessment tax return.

How should I set these up in ClearBooks?

charity
GiftAid
Pension
Write reply3

3 Replies

Hi Paul,

Welcome aboard! It is great to hear you have already connected your bank feeds to help automate your record-keeping.

As the payments you mentioned are personal rather than business expenses, they should be categorised as personal transactions when they appear on your bank statements in Clear Books. To do this, navigate to your Dashboard and click on the link for your unexplained bank statement. Find the specific pension or charity transaction and click on the Person icon in the column on the far right. This marks the transaction as personal and reconciles it against your business bank balance.

Regarding your annual Self Assessment and the specific tax relief boxes you mentioned, these are managed through the MTD Tax Return feature in Clear Books. Under the new Making Tax Digital for Income Tax rules, your self-employed or property business records handle your quarterly updates, while personal data like Gift Aid and pension contributions are added to a separate MTD Tax Return account.

The MTD Tax Return account acts as a central hub. It automatically pulls in the profit figures from your business and provides dedicated sections for you to add other information required by HMRC, including interest, dividends, and the tax reliefs you are looking for.

Once the tax year ends on 5 April, you will be able to enter your total annual pension contributions and Gift Aid payments into the MTD Tax Return account. The system will then communicate this information to HMRC as part of your final declaration, ensuring the correct tax relief is applied to your final tax calculation.

Tommy

Best answer
3 months ago

No problem Paul!

And you can open the MTD Tax Return account by hovering over your business name at the top right > Add MTD Tax Return.

Tommy

3 months ago

Thank you, Tommy.

As I'm just starting with MTD, I'll be doing the quarterly reports starting 6 Apr, so it'll be over a year before I use the MTD Tax Return account.

It's good to know that for now I mark these transactions as personal. Although it'll be a year before I need to access the MTD Tax Return account, where would I find it in ClearBooks?

3 months ago

Reply to this question

Attach images by dragging and dropping or upload
 

Your comments will be public and can be answered by anyone in the Clear Books community.

Find out what we do and who we are

Apps

Company

Social