December is often known as the 'Season of Giving', so we decided to ask our accountant, Jen Daplyn, some questions about Gift Aid...
What is Gift Aid?
Donations by individuals to charity or to community amateur sports clubs (CASCs) are tax free.
Gift Aid is one form of tax relief which increases donations to charities in the UK, at no extra cost to the donor. The charity or CASC can claim an extra 25p for every £1 donated by UK taxpayers.
Are my donations eligible for Gift Aid?
Your donations will qualify as long as they’re not more than 4 times what you have paid in income tax or capital gains tax in that tax year (6 April to 5 April).
What do I need to do?
You need to make a Gift Aid declaration for the charity to claim. You usually do this by filling in a form with some basic personal details and tick the box to confirm your donations are eligible.
You must complete a separate declaration for each charity you make donations to. Contact the charity directly and ask for a form.
At Mustard Seed we have recently made it even easier for you by adding a digital Gift Aid declaration form to our website, so you can now complete your declaration from your laptop, tablet, or mobile phone and send it directly to us.
You can include all donations from the last 4 years. Tell the charity about any tax years where you did not pay enough tax.
If your circumstances change and you no longer pay enough tax, it’s important to tell all the charities you support. If you don’t tell them and they continue claiming Gift Aid, you’ll need to pay any difference back to HMRC.
You should also update the charities you support if you change address, as the first line of your address and postcode is required as part of their submission to HMRC to claim the gift aid.
Does Gift Aid apply to Higher rate taxpayers?
Yes! Higher rate tax payers are also entitled to claim the difference between the top rate of tax they pay and the basic rate on the total value of the donation. Individuals can claim the additional tax relief through
their self-assessment tax return;
or by asking HMRC to amend their tax code.
You donate £100 to charity - they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%).
Can Gift Aid be claimed on Payroll Giving?
Donations made to charity through payroll giving aren’t eligible for Gift Aid because they’re taken from your wages before tax.
Can you claim Gift Aid from a company donation?
No, Companies are entitled to tax relief for qualifying charitable donations made to charities. The donations are deductible from the company's total profits in the year in which the donations are made.
For further information or advice on donations and gift aid for Mustard Seed please email email@example.com