Gift Aid is a government-sponsored system that helps charities and Community Amateur Sports Clubs (CASCs) increase their donations by providing tax relief on certain payments. Generally, gift aid enables a charity or CASCs to claim back the basic rate of income tax from HMRC on eligible donations made by UK taxpayers. By doing so, a charity or CASC can make the most of the donations they receive giving them extra funding to spend on supporting their causes and maintaining their organisation going into the future.
To be eligible in claiming gift aid, donors must pay an amount of income tax or capital gains tax that is at least equal to the amount that they are claiming. This means that if a donor gives £1 to a charity, that charity can then claim an extra 25p from HMRC, making their donation worth £1.25 in total. While this may not seem like much initially, gift aid tax relief can quickly add up resulting in a fair bit of extra cash for your organisation when receiving numerous donations or dealing with larger sums.
Donors can gift aid any amount of money that they like, but there are certain restrictions in place. For example, these payments cannot be used to pay for goods and services from the charity or CASCs. Instead, gift aid must be donated directly to them in order for it to qualify for tax relief.
Furthermore, in order to be eligible, payments must be made through gift aid declarations. This is a special form that donors are required to fill out in order to declare their payment, and provide details such as the charity’s name, address and gift aid reference number.
Gift Aid tax relief can make a huge difference to charities and CASCs by allowing them to increase their donations and get more funding for their causes. It is also a great way for donors to show their support, as gift aid payments are eligible for tax relief. So, if you’re looking to make a donation, consider gift aiding it – not only will your gift be worth more but you’ll also be helping a great cause.
This article has been written to provide information and not advice. Before making a donation, you should always check with the charity or CASC that they are gift aiding eligible donations and confirm any restrictions they may have in place. Additionally, you should read HMRC’s gift aid tax relief guidance carefully to ensure that you’re carrying this out correctly.
Gift Aid is a great way to increase donations and make an impact, so consider gift aiding your next donation and help support a charity or CASC today.
Through Good to Give, many charitable organisations have gained the tools required to streamline their finances and make the most of donations. To find out more about our charity accounting services and gift aid management software, get in touch with a member of our team at 020 7731 2041.