Gift Aid allows charities to reclaim tax paid by UK individual taxpayers on any donations to UK charities. This is effected through a simple declaration and can increase the value of the donation by 25%. Thus for:
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- Individuals are able to claim higher or additional rate relief on cash gifts and payments to charities under Gift Aid. Basic rate tax is treated as having been deducted, so you must pay enough tax for the year to cover the tax withheld from your Gift Aid payment.
- Special tax reliefs apply to gifts to charities of certain types of shares and securities, or land and buildings.
- Individuals have the option to make a claim for a charitable donation made in one tax year to be treated as if it had been made in the previous tax year, so long as the claim is made by inclusion on the tax return for the current year. So long as the later year's tax return is filed in time, this would mean that a payment could rank for higher rate tax relief for the current year, even if the donor is liable at basic rate, only, in the tax year in which the payment is made.
Donor benefit limits
- The benefit threshold for the first £100 of the donation will remain as it is now at 25% of the amount of the donation.
- For larger donations, charities will be able to offer an additional benefit to donors up to 5% of the amount of the donation that exceeds £100.
The maximum possible value of the benefit that a donor (or connected persons) can receive in any one tax year from a single charity remains at £2,500, even following an extremely large donation or series of donations.
Give as you earn
Employees may authorise participating employers to deduct donations from their gross salary for forwarding to their nominated charities.
Employees receive tax relief in full on their donations.