Do you donate to charity and use Gift Aid? If you are a higher rate tax payer you should Gift Aid any donations you make to charity. You will be providing an additional benefit to the charity and you will also be able to claim tax relief on the payment. It’s a win-win situation and costs you nothing.

How does Gift Aid work?

Donating through Gift Aid means that charities can claim an extra 25p for every £1 you give. For example where an individual makes a £20 cash donation to charity, the charity is able to reclaim a further £5 from HMRC. Therefore they receive a total gift of £25.

If you are a 40% higher rate taxpayer you are able to claim a further £5 tax relief under self-assessment, reducing the net cost of your donation to £15.

Remember that you are required to make a declaration that you are a UK taxpayer and if you have not suffered sufficient UK tax to support the Gift Aid amount you will be taxed on the shortfall.

Gift Aid on donated items, land and buildings

Gift Aid does not just apply to gifts of cash. Many charity shops will now sell the donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

Find out more about Gift Aid on the Government website. Read more about how we can help you to minimise your tax liabilities here.

If you would like more information or help with any tax related issues then please contact Ann Bibby on abibby@ellacotts.co.uk or 01295 250401 or contact us here and we will get back to you.