Giving to charity Gift aid

A monthly direct debit is an easy way to give to charity

If you're a UK taxpayer, a great way of giving to charity is through the tax-efficient Gift Aid. Since it was introduced Gift Aid has increased in size to be worth nearly £1bn a year to UK charities and their donors.

Your chosen charity can claim back basic-rate tax on any donations you make from HM Revenue & Customs, so every £1 you give is worth 25p more to the charity.
Therefore if you give £10 through Gift Aid, the charity actually receives £12.50. If you give £100, the charity receives £125.

Losing out through lower tax

Because the basic rate of tax went down from April 2008 from 22% to 20%, charities stand to lose money.

To help charities with this transition, HM Revenue & Customs will automatically pay charities a further 3p for every £1 made through Gift Aid between 6 April 2008 and 5 April 2011. So, at least until April 2011 your favourite charity will continue to receive 28p extra for every £1 you donate this way.

Who can donate through Gift Aid?

You can use Gift Aid if the amount of tax you have paid in the tax year of the donation is enough to cover the amount of tax the charity will reclaim against the donation.

The tax paid by you may be Income Tax, Capital Gains Tax or tax credits on UK company dividends. Tax years start on 6 April and run until 5 April the following year.
If you don't pay tax then you shouldn't make gifts through Gift Aid as you may be asked to pay the tax to the charity yourself.

Higher-rate taxpayers

If you are a higher-rate taxpayer, there is another bonus here for you. Under Gift Aid, charities can claim tax back at only the basic rate (20%), which means you can claim back the difference between the basic and higher rate on all Gift Aid donations you have made during the year (a further 20%).

You can also choose to give some or all of this difference to charity if you wish.

If you complete a Self Assessment tax return you can claim back the higher rate element of the tax relief on any donations made to charity through your tax return.

If you don't normally complete a Self Assessment tax return, call your tax office and ask for the higher rate relief to be reflected in your tax code.

How to make a gift through Gift Aid

In order for your donation to qualify under Gift Aid you need to make a declaration saying you would like to donate through the Gift Aid scheme and confirming that you have paid enough tax to cover the charity’s claim.

The charity may ask you to sign a written declaration or they may accept an oral declaration (particularly if you are making the donation by telephone).

A Gift Aid declaration can apply to:

• A single donation
• All future donations to the same charity
• Donations made to the charity in previous six years
• Or a combination of all these options.

The charity will ask you which type of declaration you want to make.

For more information on Gift Aid, read the Which? Essential Guide: Tax Handbook 2009/10. 

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