Understanding Gift Aid
What is Gift Aid?
Gift Aid is a simple way for charities or Community Amateur Sports Clubs (CASCs) to increase the value of monetary gifts from individual UK taxpayers by claiming back the basic rate tax paid by the donor. It is a system controlled and managed by the HMRC.
How does it work?
Gift Aid can add an extra 25% to donations over £1. Gift Aid can only be claimed on donations from individuals. If you donate £1 in the normal way to Welcare we will receive precisely £1. However if you are eligible and Gift Aid your £1 donation then Welcare will receive £1.25. Gift Aid is claimed by us from the HMRC twice a year so you don’t need to do anything else or pay any extra than you wish to donate but your donation increases thanks to Gift Aid.
Who can use Gift Aid?
Anyone who has paid enough income tax or capital gains tax to cover the amount that Welcare will reclaim from your donations in the current financial year can use Gift Aid. As it relies on tax status, claiming Gift Aid successfully relies on having the individual donors: title, initial and surname, full home address, vitally house number/name and postcode and a confirmation of acceptance, such as a tick box or signature. The best thing to do is download our Gift Aid Declaration. If you are having an event for us or asking for sponsorship, see below for what you will need.
Do I qualify for Gift Aid?
All individual donors who pay enough income tax or capital gains tax to cover the 25% tax that we will reclaim are eligible to take part. Taxes such as VAT and Council Tax do not qualify. If you qualify, you can complete a Gift Aid Declaration now.
Do I need to make a separate Gift Aid declaration for each tax year?
As long as you have completed one of our new Gift Aid Declaration forms, you will only need to make a declaration once. This will apply to all past donations you have made in the last four years, and to all future donations.
I am holding an event raising money for Welcare. What do I need to ensure I can receive Gift Aid from donations?
If you are having a fundraising event or trying to raise sponsorship, you can download the relevant forms that include Gift Aid on our Fundraising page. To ensure you are collecting eligible Gift Aid information that we can successfully claim from the HMRC, please make sure of the following:
- Gift Aid is only claimed on individual donations
- The declaration must clearly show: the title, forename or initial and surname of the donor, and the full home address and postcode of the donor, or door name/number and postcode at the very least
- Declarations also require: Welcare’s name, registered charity number, confirmation of acceptance and the correct HMRC wording
- As of 6th April 2016, HMRC will no longer accept forms that do not contain the latest wording and all the correct requirements. To be safe and certain, please download one of our updated forms or contact us to check
What if I pay a higher rate of tax?
If you are a donor and pay a higher rate of tax you too can benefit from the tax relief as you can claim back the difference between the higher rates of tax at 40 or 50 per cent and the basic rate of tax at 20 per cent on the total value of your gross donation.
For more information on completing your self-assessment tax return, and increasing your gift to Welcare by nominating us to receive your rebate as a higher rate taxpayer, please visit the Inland Revenue website.