Gift Aid Donations
Taxpayers who donate throughout the year are encouraged whilst donating to the UK Registered Charities to tick the box for "Gift Aid" Claim as there are 2 benefits
1) Charities can claim an additional 25% of the donation amount so the simple example if someone donated £500 and ticked gift aid then the charity would be able to claim 25% £125 from HMRC and the total donation would be £625.
This will of course, be subject to the taxpayer paying tax each year. If they do not pay tax year then the taxpayer through a Self-Assessment would have to pay the shortfall of the gift aid claim in taxes otherwise it probably would be more advisable to donate but leave the "Gift Aid" claim unticked
2) If the taxpayer is a higher rate payer then HMRC allows the Basic Rate Band to increase, which means more tax would be paid at the basic rate of 20% rather than the higher rate of 40%.
Simple example would mean a donation in the year of £400 will attract 25% tax relief and in this case it will mean £400 + 25% £100 = £500 basic rate band will increase
It is also important for the donor to provide the Registered Charity with their details because during an Audit/Review into the Charity, the Gift Aid claims are reviewed/assessed to ensure they are genuine.
If you would like further advice and detail as a Taxpayer or a Charity on the above matter then please feel free to reach out for an initial free consultation
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