This is only a brief guide. If you would like to know anything else, please ask any Inland Revenue
Enquiry Centre or Tax Office, or you can contact the Helpline numbers shown below.

Inland Revenue (Charities)
St John’s House
Merton Road
Bootle
Merseyside
L69 9BB

What is Gift Aid

If you pay tax, Gift Aid is a scheme by which you can give a sum of money to charity and the charity can reclaim from the Inland Revenue basic rate tax on your gift. That increases the value of the gift you make to the charity. For example, if you give £10 using Gift Aid in the tax year 2000/ 01, that gift is worth £12.82 to the charity.

You can make payments by cash, cheque, postal order, direct debit, standing order, debit or credit card or even in a foreign currency (including the euro).

Subject to a few rules, you can give any amount, large or small, regular or one-off, and the charity can reclaim the tax.

If you are a higher rate taxpayer, you can claim relief on the difference between the basic rate and higher rate of tax.

If you do not pay tax, you should not use Gift Aid.

How does my gift qualify for Gift Aid?

You must

• pay at least as much tax as the charities will reclaim on your gifts in the tax year in which you make them (tax credits on dividend income will count towards the tax paid). The tax year runs from 6 April in one year to 5 April in the next. See below.
• make a declaration to the charity that you want your gift to be treated as a Gift Aid donation (see Below)

Have I paid sufficient tax?

When you give money to a charity under Gift Aid, the charity will reclaim basic rate tax on that money. You must therefore pay an amount of tax in that tax year at least equal to the tax the charities will reclaim. That tax can be income tax or capital gains tax at any rate. Even if you only pay tax at the 10% starting rate, that tax can cover the tax the charity reclaims on the gift.

You can calculate the amount of tax the charity recovers by simply multiplying the amount of your gift by

With the basic rate at 22%, the charity reclaims 22/78ths of your gift.

Example
During the tax year you give a total of £400 to various charities. Under Gift Aid, we treat this sum as a gift made net of basic rate tax (i. e. after tax has been taken off at the basic rate).

With the basic rate at 22%, the charities reclaim £112.82 (£ 400 x 22/ 78) and your gross gift is worth £512.82 (£ 400 + £112.82) to them.

If you have paid less tax than £112.82, you should not make the donation under Gift Aid. You should simply give the money to the charity and not sign the Gift Aid declaration. If you do sign the declaration, so that the charity recovers tax on the donation, you may have to pay any excess to the Revenue.

If you are a starting rate (10%) or basic rate (22%) taxpayer and you have paid tax (income or capital gains) at least equal to the £112.82 claimed by the charity, there is nothing further for you to pay.

What if I am a higher rate taxpayer?

The charity reclaims tax on your gift only at the basic rate, even if you are a higher rate payer. If you are a higher rate taxpayer, you can claim the difference (18% in 2000/ 01) between the higher rate of tax of 40% and the basic rate of tax of 22% in your Self Assessment return.

So, in the example above, you may reclaim higher rate relief of £92.30 (£ 512.82 @ 18%) on your gross donation of £512.82.

Can I count tax paid on my dividend income?

Yes. Tax credits on dividend income can be used to cover tax reclaimed by the charity.

What about tax deducted from my savings?

If tax is deducted from bank or building society interest you receive, you can use that to cover the tax on the gift, provided you have not reclaimed it. If you have reclaimed that tax, then you must not use it to cover the tax on your gift.

Why do I need to give a declaration?

The declaration is the charity’s authority to reclaim tax from the Inland Revenue on your gift. By giving the declaration, you are confirming that you understand this.

How do I make a declaration?

In writing or orally. Usually, the charity will provide a written declaration form.

All you need to do is

• enter your name and address
• enter the name of the charity
• make clear whether the declaration covers just this gift or others as well (already made or to be made later)
• make clear that you want the gift or gifts to be within the Gift Aid scheme.

The charity will often complete some, or all, of the details for you. You then just complete any remaining details and send the form to the charity.

You can give a written declaration to a charity by post, fax, or e-mail. You can also make a declaration by telephone or in person. In this case, the charity will take a note of your details, as above, and send you a written record. All you need do is check that the details are correct.

Can I withdraw a declaration?

If, for any reason, you decide that your gift should not be within Gift Aid - perhaps you realise that you will not pay enough tax to cover the tax reclaimed by the charity - then you have 30 days from the date of the written record sent to you after making an oral declaration, to tell the charity and withdraw it. Your withdrawal will cancel the declaration with effect from the date the declaration was made. If you make a written declaration your cancellation will only take effect from the date you notify the charity.

Can I pay my membership subscriptions through Gift Aid?

You can pay membership subscriptions to a charity through Gift Aid, provided any membership benefits you receive do not exceed the limits above. However, you can disregard free or reduced entry to view heritage property or wildlife, the preservation of which is the charity’s main aim.