Why you should keep a record of Gift Aid charitable donations

Gift Aid is a way of donating to charity or Community Amateur Sports Club (CASC) that also includes the tax that you have been paid on the amount given.

The charity can claim back the basic tax rate that you have paid on the amount of the gift back from HM Revenue & Customs (HMRC).

The process involves signing a Gift Aid declaration including your name, address, date, signature and declaration stating that you are a UK taxpayer, with any future donations made to the charity being treated as gift-aided donations.

Why should I keep a record?

Keeping a record of your Gift Aid donations means that higher rate tax relief can be claimed.

If you pay tax at the rate of 40 per cent or higher, you can claim back the difference between the tax that you paid and the 20 per cent tax that is claimed by the charity.

You can claim this back from HMRC.

Where can I Gift Aid?

You can Gift Aid to charities and CASC’s, as well as at many popular family attractions.

With the summer months ahead, many families will be visiting zoos, museums and attractions which may have an option to add Gift Aid to any donation. Many people are unaware that they can get tax relief on these trips, so it pays to be prepared.

What are the rules?

When signing the Gift Aid declaration, the amount that you donate is taken from your taxed income, and the donation is then increased by the amount of tax that you have paid on it.

If you were to donate £100 to a chosen charity, your gift is treated as a net payment, which results in the gross amount being £125 when tax is added. The charity can then recuperate the £25 from HMRC, as this is 20 per cent, which is the basic rate tax chargeable.

In essence, you give a portion of your taxable income to the charity, which means they can then claim back the tax that you have paid on that segment on your income.

Are the rules different if I am a higher rate taxpayer?

If you are a higher rate taxpayer then you can claim higher rate tax relief. The official advice states that you should list your Gift Aid donations on your tax return or ask HMRC to add them to your PAYE code.

HMRC will subsequently increase your ‘basic rate limit’ by the amount of the donations. The basic rate limit is the point in your income scale where you begin to pay tax at the higher rate, which is £50,000 in 2019/20.

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