What is Gift Aid?
Gift Aid is an easy way for charities or Community Amateur Sports Clubs (CASCs) to increase the value of gifts of money from UK taxpayers by claiming back the basic rate tax paid by the donor.
How Gift Aid works
Since it was introduced Gift Aid has increased in size to be worth nearly £1bn a year to UK charities and their donors.
When an individual, sole trader or partnership gives money to your charity or CASC through Gift Aid, you can take their donation – which is money they’ve already paid tax on – and reclaim basic rate tax from HM Revenue & Customs (HMRC) on its ‘gross’ equivalent – the amount before basic rate tax was deducted.
If a donor is a higher rate tax payer, they too can benefit from the tax relief as they can claim back the difference between the higher rate of tax at 40 per cent and the basic rate of tax at 20 per cent on the total value of their gross donation.
How to make a donation using Gift Aid
In order to make a Gift Aid donation you’ll need to make a Gift Aid declaration. You can Download the relevant form here. (insert link to download GA Form).
The charity will normally ask you to complete a simple form – one form can cover every gift made to the same charity or CASC for whatever period you choose and can cover gifts you have already made and/or gifts you may make in the future.
Gifts made jointly by people living together
You can use Gift Aid for gifts you make jointly if you tell the charity or CASC how much each of you is giving and if you each make a Gift Aid declaration.
Gift aid rules – Donors must
- pay enough UK income tax and/or capital gains tax themselves to cover the amount of tax the charity will reclaim
- give the charity a gift aid declaration, which should include:
- their name
- their home address
- the charity’s name
- details of the donation – saying that it is a gift aid donation
- confirmation that they have paid UK tax – to cover the tax the charity will reclaim
A declaration can be made to cover individual donations,a series of donations, can cover donations made during a specified period or to cover all future donations. They can also be backdated for up to 4 years prior to the date of the declaration provided the donation was made since 6 April 2000.
Tax relief
If a customer pays the
- basic rate of tax, they cannot claim further tax relief on the payments
- higher rate of tax, they can claim higher rate relief on the payments by entering the donations in the gift aid box on their self assessment tax return. Customer’s who receive a form P810 can declare their gift aid payments on it.