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Gift Aid Explanation

Gift Aid Explanation

If you are a UK taxpayer, Gift Aid offers a simple way to increase the value of your gift to charity by allowing the charity to reclaim the tax on your gift. Currently charities are able to claim an additional 25p from every £1 donated by UK Tax Payers.

To qualify for gift aid the amount of Income Tax and/or Capital Gains Tax for each tax year (6 April to 5 April) must at least equal the amount of tax that all the charities or Community Amateur Sports Clubs (CASCs) that you donate to will reclaim on your gifts for that tax year. Other taxes such as VAT and Council Tax do not qualify.

You can calculate the amount of tax the charity will reclaim by multiplying the amount you give by 20/80, (20% being the basic rate of tax). For example, if you give £25 to a charity in a particular tax year, the charity will be able to reclaim  £25 x  20/80 = £6.25  You need to have paid at least this amount of tax during the same tax year to be able to donate using Gift Aid.

Higher rate taxpayers

If you are a higher rate taxpayer, you can claim 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 to the charity of your donation (the 'gross donation'). So, using the example above, you can reclaim higher rate relief of £6.25 (20 per cent of your gross donation of £31.25). You make this claim on your Self Assessment tax return

Non taxpayers

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