Of the various tax reliefs associated with charitable giving,
Gift Aid is the best known and, for the majority of charities, the
most useful.
HOW DOES IT WORK?
It is open to any individual UK taxpayer to apply Gift Aid to a
donation to a UK charity or a registered community amateur sports
club. The payment is treated as made after the deduction of basic
rate tax (currently 20%) and the charity is able to recover this
from HMRC. If the individual making the donation is a higher or
additional rate taxpayer, they can claim further relief to your
charity. As an example, a donation of £80 with a Gift Aid
declaration would enable your charity to claim £20 from HMRC
(bringing the amount of the donation up to £100); if the
donor is a 40% taxpayer he/she can claim relief such that their tax
bill is reduced by £20 (bringing the net cost of the donation
down to £60).
