Understanding Gift Aid What is Gift Aid? Gift Aid enables registered charities to reclaim the basic rate of tax (currently 20%) on a donation given by a UK taxpayer. What difference does it make to the donation amount? As an example, let’s assume that Mr Smith (a UK taxpayer) gives £10 to his favourite charity.  In addition to the £10 that Mr Smith has donated, the charity can reclaim the basic rate of tax that he paid on that £10, so the charity receive 25% extra, i.e. a further £2.50.  This means that the total value of the gift to the charity is £12.50 - but it only cost Mr Smith £10. To see how much Gift Aid can add to a donation of any other amount, try using an online Gift Aid Calculator. Is it true that higher rate taxpayers can reclaim money on donations, too? Yes.  If Mr Smith is a higher rate taxpayer, he can claim back the difference between the basic rate and higher rate of tax on his Annual Self Assessment Tax Return (or simply send a letter to HMRC telling them how much he has donated).  At current rates, Mr Smith would get £2 back for a donation of £10.  (There are further tax advantages for people who earn enough to pay different levels of tax on incomes of over £100,0000 or £150,000 a year.) How does a charity reclaim Gift Aid on donations? In order to claim Gift Aid on Mr Smith’s donation, the charity will need to get him to sign a Gift Aid Declaration Form, which confirms his full name, his home address, the name of the charity, details of his donation, and that it is a Gift Aid donation.  See an example Gift Aid Form. Every now and then (and at least once a year) the charity files a R68 Form (available from the HMRC website), listing all the donations they have received on which Gift Aid can be claimed.  HMRC with then credit the charity with the Gift Aid a few weeks later.  It’s worth remembering that charities can still claim Gift Aid on donations made up to four years previously.  Some institutions have managed to claim £1000s simply by checking all Gift Aid has been accurately claimed. Where can I find more information on Gift Aid? The single best place to find out about all the rules, exceptions, and how-tos for Gift Aid is the HMRC website itself at: http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm FIND DEVELOPMENT JOBS!   Whether you’re looking to start a career in development or are already an experienced practitioner, you can find vacancies today! Understanding Gift Aid © Orier Digital Limited 2012