What is Gift Aid?

Holly Thomas / 08 April 2015

Gift Aid allows charities to claim the tax from your donations back from the government, without costing you a penny. Holly Thomas explains how to give money using Gift Aid.

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.

Worried that charity collector is suspicious? Read how to spot a fake. 

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.

The annual total raised through Gift Aid has increased from £3.3 billion in 2009 to £4.1 billion in the last tax year, according to Treasury figures. But the Charities Aid Foundation estimates that only 43% of us currently Gift Aid our donations.

Six ways to help charities, without donating money. 

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 HM Revenue and Customs (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 HM Revenue & Customs (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 charity through your work payroll. This enables people to help charity by making donations net of basic-rate tax, while charities reclaim the difference from HMRC.

Read more about payroll giving. 

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.