A donation can be made under the Gift Aid scheme by any individual UK taxpayer.. You need to have paid enough tax in the year to cover the amount we will be reclaiming on your gift. There is a limit to the value of benefits that you can receive in return for any donation made under this scheme.
Donations made under Gift Aid, no matter how large or small, are increased by 25% by the Inland Revenue. This means we benefit by an extra £250 for every £1000 donated, at no extra cost you. Higher rate taxpayers can reclaim the difference between standard and higher rate tax in their self-assessment return.
Mr Smith makes a gift of £1,000. By completing a Gift Aid declaration form, the Community Foundation is able to claim back a further £250 from the Inland Revenue.
If you are a higher rate taxpayer, you have the right to reclaim tax on your donations. All you have to do is remember to include details of your charitable gifts on your self-assessment tax form to claim your additional personal tax relief. Furthermore, since April 2003, higher-rate taxpayers have been able to reclaim tax relief from donations paid to charity both during the previous tax year and during the current tax year, which means that the relief is paid that much more quickly
Ms Jones wishes to make us a donation of £10,000. The Community Foundation reclaims tax on her donation - £2,500. However, Ms Jones is a higher-rate taxpayer, so she is able to claim tax relief on this gift too. She is eligible to claim the difference between the higher rate of tax (40%) she has paid on her salary, and the basic rate of tax (20%) reclaimed by us (40% - 20% = 20%). Thus, the gross value of Ms Jones' gift to the charity being £12,500, she is entitled to the following tax relief: £12,500 (gross donation) x 20% = £2,500 tax relief. In other words, the Community Foundation has received £12,500 but the donation has actually cost Ms Jones £7,500.
Businesses can get tax relief when they give money, whether as a one-off or a regular payment, under the Gift Aid scheme. There is no limit to the amount that the business can give, but the way you get tax relief will depend upon whether the business is a company, a sole trader or a partnership and depend on their tax rate. Any gift made by a partnership is treated as being made by the individual partners in equal amounts, unless otherwise specified. Please go to Tax Effective Giving for Companies.
To make a donation under Gift Aid you need to complete and sign a simple Gift Aid Declaration form and return it to us. This covers all future donations you make to us.
If you would like more information about tax implications of giving go to http://www.hmrc.gov.uk/CHARITIES/giving-to-charities-indiv.htm# for the Inland Revenue’s booklet: IR65 Giving to charity by individuals, or call them on 0845 9000 404.
We help communities in London, particularly those in North East London, in Barking & Dagenham, Enfield, Hackney, Haringey, Havering, Newham, Redbridge, Tower Hamlets and Waltham Forest.