What is Gift Aid?
Gift Aid is tax relief on money donated to UK charities. The Inland Revenue
treat donations as if the donor had already deducted basic rate tax from
them. The charity can then reclaim this tax to increase the value of a
If you pay UK tax on your income or gains
(e.g. through PAYE, by Self Assessment (SA) or at source on your
bank/building society interest) and then make a Gift Aid donation, UK
charities can claim back basic rate tax relating to that donation directly
from HM Revenue & Customs. As a result any gift you make, as a Gift Aid
donation, is worth more to the charity than the amount you actually
Gift Aid and its importance
The Scottish Community Foundation can increase the value of
your donation through the Gift Aid scheme and hence the amount available to
the charity. Higher rate taxpayers are also entitled to tax relief.
Gift Aid Rules
Donors must pay
enough UK income tax and/or capital gains tax themselves to cover the
amount of tax the charity will reclaim, give the charity a gift aid
declaration, which should include their:
• their home address,
• details of the donation acknowledging
it is a Gift Aid donation and
• confirmation the donor is a UK tax
Using Gift Aid means that for every pound you
give, we get an extra 28 pence from the Inland Revenue, helping your
donation go further. For example, this means that £10 can be turned
into £12.28, just so long as donations are made through Gift Aid.
Imagine what a difference that could make and it doesn't cost you a
Who can make a Gift Aid
From April 2000, the following will
qualify for Gift Aid:
• donations by individuals who
are resident in the UK.
• donations by individuals who are Crown
servants or members of the UK armed forces serving overseas.
• donations by other non-resident individuals, provided they have
income or capital gains charged to UK tax at least equal to the gross
amount of the donation (i.e. the donation before deduction of basic rate
How does Gift Aid work?
When an individual taxpayer makes a Gift Aid donation to
charity it is treated as paid after deduction of income tax at the basic
For example, if he or she gives £100, it
is treated as a gross donation of £128.20 from which tax @28%
(£28.20) has been deducted. The donor then makes a Gift Aid
declaration to the charity. The charity can then claim the tax, treated as
deducted, from the Inland Revenue (so gets £128.20 in total).
A higher rate taxpayer is entitled to further tax relief at
the difference between higher and basic rate tax on the gross donation,
£128.20 @18% (£23.08). He or she claims this by entering the
donation on their Self Assessment tax return.
Advantages of Gift Aid for You
• Your gift is worth more to the charity without you paying
• If you are 65 or older, your gross Gift Aid donations are
deducted from your taxable income when calculating age related allowances,
this may increase your age related allowances.
• You can include Gift
Aid donations on your Tax Credit application; because the donations reduce
your taxable income you may be awarded more tax credits.
• If you pay
higher rate tax you can claim back the difference between the basic rate of
tax and the higher rate on all gross Gift Aid donations made each tax year.
The rules and regulations governing Gift Aid will
change from April 2008, where tax will change from 28% down to 22%.
Therefore, it is important to collect as many Gift Aid declarations as
possible, via your sponsorship form and online donations, before this date
in order to maximise the value of the Gift Aid declarations.
For more information about how Gift Aid works and for
updates on rule changes please click here for
HM Revenue and Customs Website
visit our Sponsorship
Tips section for further information on sponsorship.