Gift-Aid – How It Works
If you pay UK Tax, then the Gift Aid Scheme makes your gifts of money go further and increases the value of donations to charities. Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities such as ourselves take your donation, which is money you’ve already paid tax on, and reclaim the basic rate tax on its ‘gross’ equivalent – the amount before basic rate tax was deducted. Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it could be worth £12.50 to us! Find out more on Gift Aid basics here. If you claim age-related allowances or tax credits, Gift Aid donations can sometimes increase your entitlement.
In order that we can claim this, you don’t need to do anything other than let us know that you wish to do this (the online form will take you through the process) – we then reclaim the money from HMRC. Donations to charities under the Gift Aid Scheme are currently increased by 25p for every pound donated.
Higher-rate taxpayers can also claim back the difference between the 20 percent and 50 percent tax rates at year end when they fill out their tax return. If this relief is then donated to charity it too can be boosted by Gift Aid. For example, for each £100 donated by you paying 50% tax in the forthcoming tax year, approximately £37.50 can be reclaimed in relief. If this tax relief is donated as well, then we will receive, for example, a total of £176.28 for each £100 of your own money you donate.