Gift Aid is an amazing opportunity for Charity’s and Charity Shops to gain an additional 25% income, by way of a Tax Refund from the UK Government, based on the Gift Aid declaration by tax paying donors who complete a Gift Aid Form when donating items to the cause the Charity supports.
When donating through Gift Aid, charities & charity shops can claim an extra 25p for every £1 you give. And the great news is that it will not cost you any extra!!
Charities can claim Gift Aid on most donations, but some payments1 will not qualify.
NOTE : You will need to be a UK Taxpayer in order to be a Gift Aid Donor
What you need to do to become a Gift Aid Donor
You will need to make a written Gift Aid declaration in order for the charity to claim this additional help from the Government. You usually do this by filling in a form – either online or in person.
For Ahava Community you can download a Gift Aid form HERE
You must give a declaration to each charity you want to donate to through Gift Aid, as this will assist them in being able to collect this Tax Refund to support their charitable cause from the UK Government.
INCREDIBLE NEWS – It is possible to include donations from the last 4 years!
REMEMBER : Be sure to tell the charity about any tax years where you did not pay enough tax for them to be able to collect this tax refund.
Paying enough tax to qualify for Gift Aid
The tax could have been paid on income or capital gains.
You must tell the charities you support if you stop paying enough tax.
Higher rate taxpayers
If you pay tax above the basic rate, you can claim the difference between the rate you pay and basic rate on your donation. You can do this either:
- through your Self Assessment tax return
- by asking HM Revenue and Customs (HMRC) to amend your tax code
- You donate £100 to charity
- The Charity claim Gift Aid to make your donation £125.
- You pay 40% tax so you can personally claim back £25.00 (£125 x 20%)
- If using Payroll Giving, you do not pay the difference between the higher and basic rate of tax on your donation.
Getting tax relief sooner as a taxpayer
In your Self Assessment tax return, you normally only report things from the previous tax year.
But for Gift Aid, you can also claim tax relief on donations you make in the current tax year (up to the date you send your return) if you either:
- want tax relief sooner
- will not pay higher rate tax in current year, but you did in the previous year
You cannot do this if:
- you miss the deadline (31 January if you file online)
- your donations do not qualify for Gift Aid – your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year
If you do not have to send a tax return, contact HMRC and ask for a P810 form. You’ll need to submit it by 31 January after the end of the previous tax year.
GIFT AID WORKS DIFFERENTLY TO HOW YOU MIGHT THINK
Unfortunately for the charity, when you donate goods and other items for them to sell, such donations do not qualify for Gift Aid relief, as it only applies to gifts of money.
It is possible, however, for a charity to act as an agent for you by selling goods on your behalf. If the donation of the sale proceeds is made in this way, then the charity will qualify for a tax refund of 25% of the net donation amount.
You can then also include a deduction for the amount donated plus the 25% received by the charity (the gross amount) in your tax return.
NOTE: You will receive a further 20% tax relief either in the tax year you make the donation, or the year before if you choose to claim relief in the preceding tax year.
Most charities do usually operate this type of Gift Aid scheme for items that are donated for sale, and they will write to you after the sale to confirm that you wish to treat the proceeds received as a donation to their charity, and so you can also declare this on your tax return.
The charity must keep a record of the items they sell on your behalf, and they may ask you to complete a Gift Aid declaration before the sale (in anticipation of the proceeds being gifted to them) and if so, the wording of that declaration must not commit to you making a donation, as you must retain a choice of whether or not to gift the proceeds.
FUTHER RESOURCES ON GIFT AID :
1 The donor must:
- have paid the same amount or more in Income Tax or Capital Gains Tax in that tax year
- make a Gift Aid declaration that gives you permission to claim it