The festive season usually means more people will offer their support to those less fortunate by donating to charities or buying festive cards that fund a particular cause.
This year, why not consider making a charitable donation via Gift Aid, allowing the charity to claim back basic tax relief from HMRC at no additional cost to your donation?
What is Gift Aid?
Gift Aid is available to charities and community amateur sports clubs (CASCs). For every £1 donation you make, a charity can claim an extra 25p, with no extra cost to you. For example:
- You donate £40 to a charity with Gift Aid
- If the charity is registered in the UK, they can claim 25% of the donation back from HMRC which in this case, is £10.
- This means the charity will receive £50 in total
How do I donate via Gift Aid?
To donate via Gift Aid, you need to make a declaration for the charity which confirms that you reside and pay tax in the UK. This usually involves ticking a box on the donation form.
Remember that your donations will qualify for Gift Aid as long as you pay tax of more than 25% of the payment you are planning to make.
Can I claim tax relief on my donation?
If you’re a higher-rate taxpayer, you can claim back the difference between the rate you pay and the basic rate on your donation through your tax return. For example:
- You donate £100 to a charity
- The charity claims £125 with Gift Aid
- You pay 40% tax – you are able to claim back £25 (£125 x 20)
Summary
If you are a UK taxpayer thinking about donating to a charity this Christmas and you pay tax of more than 25% of the donation you are planning to make, please consider donating with Gift Aid. Not only will the charity be able to claim extra funds from HMRC, but you can also benefit from tax relief if you pay a higher tax rate – a win-win situation.
Get in touch
If you would like more information on Gift Aid donations or would like to discuss your individual circumstances in more detail, please speak to your usual PM+M adviser or get in touch by emailing enquiries@pmm.co.uk.
