Gift Aid is a brilliant scheme run by the UK government that allows charities to increase the value of donations at no extra cost to the donor. But how does it work exactly? Let's delve into the mechanics of this powerful initiative that is helping charities make the most of every donation.
What is Gift Aid?
Gift Aid is a tax relief set up by the UK government to enable registered charities to reclaim the basic rate tax already paid on donations by the donor. This means that for every £1 donated, the charity can claim an extra 25p, making the total worth £1.25, without costing the donor any extra!
How Does Gift Aid Work?
Here's a step-by-step breakdown of how the Gift Aid process works:
Donation: A UK taxpayer makes a donation to a registered charity and opts in for Gift Aid.
Declaration: The donor must make a Gift Aid declaration. This can be in writing, orally or even online. The declaration must include the donor's full name, home address, the name of the charity and a statement that the donation is a Gift Aid donation.
Claim: The charity takes the donation and the Gift Aid declaration and submits a claim to HM Revenue and Customs (HMRC).
Reimbursement: HMRC then pays the Gift Aid amount (25% of the donation) to the charity.
It's important to note that Gift Aid can only be claimed on personal donations made by a UK taxpayer. The donor must have paid the same amount or more in Income Tax or Capital Gains Tax in that tax year.
The Impact of Gift Aid
Gift Aid is an incredibly valuable tool for charities. It allows us to increase our fundraising income by a significant amount, enabling us to do more good. From funding research and projects, to supporting operational costs, the additional income from Gift Aid can make a big difference.
Making the Most of Gift Aid
Gift Aid is a fantastic way for donors and charities to maximise the impact of charitable donations. As a donor, it allows you to boost your donation without any additional cost and as a charity, it provides a vital source of extra income to help achieve our mission.
If you're a UK taxpayer and want to make your donations go further, consider using Gift Aid on your next donation.
