Gift Aid

Fundraising can be boosted by 28% by claiming Gift Aid on qualifying donations.

If you pay tax, Gift Aid is a scheme by which you can give a sum of money to charity and the charity can reclaim from the Inland Revenue basic rate tax on your gift. That increases the value of the gift you make to the charity. For example, if you gave £10 using Gift Aid in the tax year 2007/2008, that gift is worth £12.82 to the charity.

You can make payments by cash, cheque, postal order, direct debit, standing order, debit or credit card or even in a foreign currency (including the euro).

Subject to a few rules, you can give any amount, large or small, regular or one-off, and the charity can reclaim the tax.

If you are a higher rate taxpayer, you (the donor) can claim relief on the difference between the basic rate and higher rate of tax via your self assessment claim. However the charity can only ever claim tax back at the standard rate of tax.

The standard rate is 28% (this includes HMRC paying a transitional relief supplement of 3% based on the qualifying donations in effect for 3 years up until 2011 due to recent tax changes in April 2008).

If you do not pay tax, you should not use Gift Aid.

How does a gift qualify for Gift Aid?

You must

• pay at least as much tax as the charities will reclaim on your gifts in the tax year in which you make them (tax credits on dividend income will count towards the tax paid). The tax year runs from 6 April in one year to 5 April in the next
• make a declaration to the charity that you want your gift to be treated as a Gift Aid donation
• not receive excessive benefits in return for your gift
• provide your name and home address to the charity - anonymous donations cannot be gift aided