Gift Aid
What is Gift Aid?
When you make a donation to a charity, the charity is able to claim back the tax that you have paid on the donation. This mechanism is called Gift Aid and amounts to an extra 25p for every £1 that you give.
How does it work?
If you give £10 to a charity and you are a basic rate taxpayer (20%), you will have paid £2.50 in tax on the gross donation (to take home £10, you will have earned £12.50 before tax). Charities are able to reclaim this £2.50 back from HMRC.
Who is eligible?
Gift Aid can be applied to any UK, EU, Norwegian or Icelandic charity that is registered with HMRC.
You must be a UK taxpayer for your donation to qualify for Gift Aid. This can either be Income or Capital Gains Tax, but you must have paid enough in the tax year that you make the donation to at least cover the amount that the charity will claim (25p per £1).
You will need to inform the charity that you are a UK taxpayer and you would like them to reclaim the tax on your donation. You will do this by making a Gift Aid declaration, most commonly done by filling in a simple form, provided to you by the charity.
A typical Gift Aid declaration will include:
• The Charity Name
• Name of Donor (initial and surname)
• House number and full postcode of their home address
• Confirmation that the donor has paid enough tax to cover the amount your charity will reclaim – It is easiest to include a statement on your form that says “To qualify for Gift Aid, you must pay an amount of UK Income Tax and/or Capital Gains Tax at least equal to the tax that the charity reclaims on your donations in the appropriate tax year”
• The donation(s) to be covered by the declaration – as well as the current gift, one declaration can cover all future declarations and those made in the past four years by the donor as long as the declaration makes provisions for this and the donor positively opts-in to this on the declaration
Declarations can be given in writing or orally and can be obtained and stored in many ways: paper form, email, text message, fax or online.
