What is Gift Aid?
Overview
Gift Aid is an easy way for charities or Community Amateur Sports Clubs (CASCs) to increase the value of gifts of money from UK taxpayers by claiming back the
basic rate tax paid by the donor.
How Gift Aid works
When an individual, sole trader or partnership gives money to your charity or CASC through Gift Aid, you can take their donation – which is money they’ve already
paid tax on – and reclaim basic rate tax from HM Revenue & Customs (HMRC) on its ‘gross’ equivalent – the amount before basic rate tax was deducted.
If a donor is a higher rate tax payer, they too can benefit from the tax relief as they can claim back the difference between the higher rates of tax at 40 or
50 per cent and the basic rate of tax at 20 per cent on the total value of their gross donation.
Making a Gift Aid repayment claim
Once your charity or CASC is recognised by HMRC, you can reclaim the basic rate of tax on Gift Aid donations - this is 20 per cent from 6 April 2008. You can
work out the amount of tax you can reclaim by dividing the amount donated by four. This means that for every £1 donated, you can claim an extra 25 pence.
In addition, HMRC will automatically pay your charity or CASC a further three pence for every pound donated on or before 5 April 2011. This ‘transitional relief’
– to adjust to the fall in basic rate tax (from 22 per cent to 20 per cent) – is available from 6 April 2008 until 5 April 2011. This means for every £1 donated, your charity or CASC
can receive 28 pence, so the total value of the donation is £1.28. You can make your claim by filling in the R68(i) Gift Aid claim form.
Useful links
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