I was thinking about a (theoretical) situation the other day having recently confirmed my income (and my wifes') for Child Tax Credit purposes.
In calculating your effective income for tax credit purposes, certain things are deducted from your actual income. One of these things is any donations that you have made to charities through the Gift Aid scheme. e.g. if you have a joint income of 35K but you've given 5K to charity, then your child tax credits are awarded based on an income of 30K.
Now, what I was wondering is this. Say, for example, that my wife and I have a joint income of 35K but I buy a lottery ticket one week and win a million pounds. I decide to give a donation to charity of 35K. What happens to my effective income for calculating child tax credits? Simplistically it would be zero but that doesn't seem right (or fair).
Anyone know what would actually happen? Is the amount deleted for Gift Aid donations capped at the level of tax you've actually paid?
RG