What is Gift Aid?
Gift Aid is a tax relief scheme that allows charities (including churches) and Community Amateur Sports Clubs (CASCs) to claim an extra 25p for every £1 donated by UK taxpayers. This means that if you’re a UK taxpayer, you can give a little bit extra to your favourite charities without it costing you anything extra.
The receiver must be a registered charity or Community Amateur Sports Clubs (CASCs). * The donor must be a UK taxpayer. * 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 CASCs that they donate to will reclaim on their gifts for that tax year.
How to make Gift Aid Donation
- The donor must provide the charity with a declaration that they wish to Gift Aid their donation.
- The declaration confirms that the donor has paid or will pay an amount of Income Tax and/or Capital Gains Tax the charity will reclaim.
- You can include all donations from the last 4 years. Tell the charity about any tax years where you did not pay enough tax.
Here are some reasons why Gift Aid donations are so important:
Gift Aid donations allow charities and CASCs to do more of the vital work they do. The extra 25p for every £1 donated can add up quickly, and it can make a significant difference to the amount of money a charity or CASC has available to spend on their projects and services.
Gift Aid donations don’t cost you anything extra. You’re simply giving the tax relief you would have paid to HMRC to the charity or CASC you’re donating to. This means that your donation goes further and can make a bigger impact.
Claiming Gift Aid is a simple process. All you need to do is fill in a Gift Aid declaration form and give it to the charity or CASC you’re donating to. The charity or CASC will then claim the Gift Aid from HMRC on your behalf.
Whether it is a church or charity that helps animals, a CASC that promotes sport in the community, or a medical research charity, your donation can make a real difference to the lives of people and animals in need.
Myths surrounding Gift Aid donations that we want to clarify:
Myth 1: Gift aid donation affects your tax code, pension or other benefits. That is not true. The 25% paid on your donation to your church, charity or CASC is not your money. It is an incentive from the government.
Myth 2: Only wealthy people can make Gift Aid donations This is not true. Anyone who pays income tax or capital gains tax in the UK can make Gift Aid donations. If you’re a basic rate taxpayer, the charity or CASC can claim an extra 25p for every £1 you donate, and you won’t have to pay any extra tax. If you’re a higher rate or additional rate taxpayer, you can also claim back some of the tax relief on your self-assessment tax return.
Myth 3: Charities keep a percentage of Gift Aid donations for themselves This is not true. Charities and CASCs can only claim Gift Aid on the amount of money donated, not on any other income they receive. The government also provides the tax relief, not the charities themselves.
Myth 4: Gift Aid is too complicated to claim This is not true. Claiming Gift Aid is a straightforward process. All you need to do is fill in a Gift Aid declaration form and give it to the charity or CASC you’re donating to. The charity or CASC will then claim the Gift Aid from HM Revenue & Customs (HMRC).
Myth 5: You have to keep track of all your donations to claim Gift Aid This is not true. You only need to keep track of donations if you’re a higher rate or additional rate taxpayer and want to claim back the tax relief on your self-assessment tax return. If you’re a basic rate taxpayer, the charity or CASC will claim the Gift Aid on your behalf.