Gift Aid is a tax relief scheme organised by HMRC that means charities can claim extra money on the donations made by UK taxpayers. The scheme increases the value of charitable donations but at no extra cost to the donor, helping charities to receive extra funds and financial support.
What Is Gift Aid?
When a UK taxpayer donates money to a registered charity and completes a Gift Aid declaration, the charity can then reclaim the basic rate of tax from that donation. This means that for every £1 donated, the charity can claim an extra 25p from HMRC.
Who Can Use Gift Aid?
Gift Aid is available to anyone who pays enough income tax or even capital gains tax during the tax year to cover the amount that is then reclaimed by the charity. The tax paid must at least equal the amount of tax the charity will reclaim or if not, the donor may need to pay the difference to HMRC.
Evesham accountants such as randall-payne.co.uk/services/accountancy/evesham-accountants, will be able to assist you with what tax relief will relate to your charitable donations.
Additional Tax Relief for Higher-Rate Taxpayers
Higher-rate and additional-rate tax payers may also claim extra tax relief on donations through their Self Assessment tax return and the difference between the higher tax rate and the basic tax rate can be reclaimed personally by the donor.
For instance, if a higher-rate taxpayer donates £100, the charity still receives £125 through Gift Aid, while the donor may then go on to claim further tax relief from HMRC directly .
