If you are a UK taxpayer, Gift Aid lets charities reclaim the tax from HM Revenue and Customs (HMRC) you have already paid on your money, without it costing any more for you.
To let charities reclaim Gift Aid on any donations you make, you must be a UK taxpayer - charities can't claim Gift Aid if you don't pay income tax in the UK.
Gift Aid for basic rate taxpayers
If you’re a basic rate taxpayer (i.e. you pay income tax at the 20% rate), all your charitable donations are treated as if basic rate income tax had been deducted.
For example, if you donate £10,000 to The Christie charity, we can claim £2,500 in Gift Aid. This means the total The Christie charity receives will be £12,500.
Gift Aid for higher rate taxpayers
If you pay tax at the higher rate, you can claim back the difference between the higher rates of income tax (40% or 45%) and the basic rate (20%) on the total value of your charitable donation. So not only does The Christie charity gain the additional Gift Aid money on your gift, but the amount that you end up paying can be even lower than the amount you have given to the charity.
For example, if you pay the 40% rate, a donation of £10,000 allows you to claim back £2,500. This means the donation will only cost £7,500, and The Christie charity can also claim the Gift Aid, meaning we receive £12,500.
If you pay the 45% rate, a donation of £10,000 allows you to claim back £3,125. This means the donation costs you only £6,875, but The Christie charity still receives £12,500.
Self-assessment giving is when you complete a self-assessment tax return and find that you are entitled to a tax refund, and you then choose to donate all or part of the repayment directly to charity. You can also ask for Gift Aid to be included on the repayment.
HMRC will give your refund (plus any Gift Aid tax repayment) directly to The Christie charity.
Gifts of assets and tax relief
If you give or sell any qualifying investment for less than its market value to a UK charity, you can claim tax relief on this gift. You can also get capital gains tax relief on asset gifts.
This can be done with certain listed shares, securities and other investments. Please get advice from your lawyer, accountant or other financial or legal professional before making any gift.
For more information on tax-efficient giving, please visit the GOV.UK website.
To discuss how you could give and save money on tax with Gift Aid, please get in touch in complete confidence with our head of major relationships, Marie Toller on 0161 918 7399 or at firstname.lastname@example.org.