Giving to charity is a great way to support your favourite cause.
If you are a UK taxpayer, you can help boost the amount you give to your chosen charity by using a clever tax trick called Gift Aid. Even better - it won’t cost you anything extra.
What is Gift Aid?
Gift Aid allows charities to claim back any basic-rate income tax paid on donations.
Thanks to this handy tax relief, for every £1 donated, the charity – as well as community amateur sports clubs - receives an additional 25p.
The rules state that for the charity to claim the extra, the donor must sign a declaration form. Look for the Gift Aid box to tick when you make your donation, whether it’s on paper or online.
Forms are usually provided by the charity, but if there isn't one, ask the charity for a form or print one off from the HM Revenue & Customs' website. If you don’t sign up to it, the charity is missing out on valuable cash.
When you give items to a charity shop, they too might ask you to sign up for Gift Aid. Even if you’re in a hurry, take the time to fill it out. It’s only a few basic details, and every extra penny counts.
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Is Gift Aid really worth it?
Charities can claim Gift Aid on most donations, although some payments don’t qualify, such as donations made through payroll.
HM Revenue and Customs (HMRC) data from March 2019 revealed that the annual total raised through Gift Aid has risen to £1.35bn, up £90m from the previous year. But nonetheless charities could still be missing out on an estimated £600m through people neglecting to Gift Aid their donations.
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What if I am a higher earner?
If you pay tax at a rate of 40% or 45%, you can claim the difference between the higher and basic rate on your donation which you can do through your self-assessment tax return or, alternatively, by asking HMRC to amend your tax code.
Keep records of what you give
You need to keep records of donations if you want to claim tax back on them. If you’re claiming tax back through your self-assessment tax return or by asking HMRC to amend your tax code, keep records showing the date, the amount and which charities you’ve donated to. HMRC recommends keeping records for at least 22 months from the end of the tax year they’re for.
You can also give to charities through your work payroll. This enables people to help charities by making donations net of basic-rate tax, while charities reclaim the difference from HMRC.