What is Gift Aid?
Gift Aid gives you an extra 25p for every £1 you donate.Gift Aid is an income tax relief designed to benefit charities and Community Amateur Sports Clubs (CASC). If you’re a UK taxpayer, Gift Aid increases the value of your charity donations by 25% because the charity can reclaim the basic rate of tax on your gift at no extra cost to you.
How does Gift Aid work?
The process is really simple; all you need to do is fill out a Gift Aid Declaration form. This is a statement from you to the charity confirming that you want to donate through Gift Aid and receive tax back on your donation.
Are all donations eligible?
For a donation to qualify for Gift Aid, the donor must have paid or will pay an amount of Income Tax and/or Capital Gains Tax for the current tax year (6 April to 5 April) that is at least equal to the amount of tax that all the charities and Community Amateur Sports Clubs (CASCs) that the donor donates to will reclaim on their gifts for the current tax year. They must understand that other taxes such as VAT and Council Tax do not qualify and understand the charity will reclaim 25p of tax on every £1 that I have given.
From April 2015, the income tax personal allowance has increased to £11,500 for individuals born after 5 April 1948. If your income is below £11,500, you will no longer be able to claim Gift Aid on eligible donations.
It is worth noting, you can not make donations on behalf of someone else or a company. Also CAF Give As You Earn donations are not Gift Aid eligible as they are taken from your salary pre-tax.
What if I pay higher rate tax?
If you’re a higher rate taxpayer, you can claim additional tax benefits for the donations you make to charity, which you can keep or pass on to a charitable organisation. Simply indicate how much you’ve donated when completing your tax self-assessment form.