This short guide is here to completely break down the term ‘Gift Aid’ once and for all; from everything to what it actually is, to whether you qualify for it, to the steps you have to take to claim it. Now, let’s get into it.
What actually is Gift Aid?
The most important aspect to understand is that if you do add Gift Aid to your donation, you can boost the value of your donation by a quarter — at no extra cost to you. So, for every £1 you donate, Gift Aid ensures that another 25p will be given to the charity. This is because Gift Aid is an income tax relief — meaning the charity can reclaim the basic rate of tax already paid on your gift by the donor. It therefore benefits charities massively — Gift Aid tax repayments equalled a whopping £1,280m across the tax year 2016–2017
How do I know if I qualify for Gift Aid?
As it turns out, it really is quite simple — if you’re a UK taxpayer, who pays enough tax, then you’ll qualify for Gift Aid. To know if you pay enough tax, simply ask yourself the following: ‘do I pay UK Income or Capital Gains Tax at a rate equal to the amount of Gift Aid claimed on all of my donations this tax year?’ Sadly, VAT and Council Tax do not meet these criteria.
On to the smaller print: Your donations unfortunately will not qualify for Gift Aid if they’re more than four times the tax you’ve paid in that tax year, and if you stop paying enough tax at any point, you must tell the charity you’re donating to.
Seems straightforward, right? Essentially, the amount you pay in tax determines whether your eligible as a ‘Gift-Aid giver’. However, the conditions surrounding your donation also have their role to play in determining whether a single donation is eligible, too…
When would my donation not qualify?
There are a few stipulations by which your donation wouldn’t qualify for Gift Aid — even if you personally meet the above criteria — but don’t worry, we have you covered. In simple terms, your donation will not qualify for Gift Aid if you’re getting something in return for your finances, or if the money wasn’t yours to give away. If you’ve been charged an entry fee, have bought something, or have been entered into a competition — you can’t claim Gift Aid. Furthermore, if the donation was on behalf of someone else, like a group of people or company, it again cannot be claimed. That’s about it, really.
How do I make a declaration?
The short answer is that it couldn’t be easier. For most online donations, you’ll be given the simple option to tick a box at the end of the donation process. For donations made by cheque (old-school, we know!) you’ll usually need to fill out and return a quick Gift Aid Form, and ensure that the appropriate option is selected. In either circumstance, if any of your key details change (incl. your name, address, your tax status), you’ll need to update your details.