SEARCH, INDEX, UPDATES, CONTENTS, IDEAS, GIFT AID
The Donor -
If you give money to charity, and you are a taxpayer, you can increase the
value of your gift by completing a simple declaration (but see the benefit rules
below).
There is no specific form for the declaration but it must contain -
The declaration does not have to be signed.
The declaration can cover any specific donation made since 6 April 2000, all donations in a specific period starting after 6 April 2000, or all donations since 6 April 2000 including any future ones until notified otherwise.
Higher rate taxpaying donors can claim further relief on their Self Assessment Tax Returns.
While basic rate tax is 22%, a donation of £10 is worth £12.82 to the charity and reduces the tax payable by a higher rate taxpayer by £2.30 making the net cost £7.70. (£12.82 times 40% equals £5.12 and leaves £7.70).
The donor must suffer tax each year at least equivalent to the tax recoverable by the charities on all the declarations given. Tax at 10% and tax credits on dividends which cannot be reclaimed count as tax suffered for this purpose.
You should notify the charity if you change your name or address.
The Inland Revenue publish forms at http://www.inlandrevenue.gov.uk/charities/appendix_b1.pdf and http://www.inlandrevenue.gov.uk/charities/appendix_b2.pdf
The Benefit Rules -
A donation cannot qualify as as Gift Aid donation if the donor, or anyone
connected with the donor, receives any benefit exceeding the following limits as
a result of making the gift, or total benefits exceed £250 from all gifts to
the charity within the tax year. The limits are -
| Amount of donation | Value of benefits |
| £0 - £100 | 25% of the donation |
| £100.01 - £1,000 | £25 |
| £1,000.01 + | 2.5% of the donation |
A free or reduced price right of admission is disregarded as a benefit if it is -
It is not disregarded as a benefit if it extends beyond the right of admission to view the property or wildlife, e.g. if it includes the right to attend a concert at a heritage property.
The Receiving Charity -
If you are a charity receiving donations from taxpayers, you can increase the
value of their gift by completing a simple declaration form for them, getting
their verbal agreement and sending them a copy.
You can collect this information for cash donations by providing appropriately preprinted envelops which will be valid claims if donors complete the relevant sections.
The receiving charity must keep detailed records linking donations received, the declarations and their claim for repayment of tax.
In order to reclaim the tax, you will need to apply for an authorised signatory form if you do not already have one, and Repayment form R68 and Guidance Notes, from -
Inland Revenue (Charities)
Charity Title Section
St John's House
Merton Road
Bootle
Merseyside
L69 9BB
Telephone 0151 472 6036
More details are available at http://www.inlandrevenue.gov.uk/news/budget/charityguide.pdf.
Charity functions -
Carefully arranged, it may be possible to arrange a ball or similar function
and charge a commercial ticket price of say £20 per person, which must more
than cover costs, and invite participants to make a separate voluntary and
unconnected donation of perhaps £30 each which could be enhanced by Gift
Aid. You would need to allow people to attend the event without making a
donation or the Inland Revenue would challenge this as a sham.
See also - Gift Aid declaration - A form you may print and complete.
Reminder - disclaimer applies. Please feedback your comments. This page was last modified 1 June 2005.