Background to Gift Aid
What is Gift Aid?
Section titled “What is Gift Aid?”Gift Aid is a generous UK Government scheme enabling charities to reclaim tax paid on donations. Personal taxes such as income tax paid on earnings and savings or capital gains tax all qualify for Gift Aid. Other types of taxes such as VAT and council tax do not.
Charities in general under use Gift Aid, although some sectors are very well organised with it, particularly large charities and churches.
Research by the Institute of Fundraising a few years ago suggested that up to £740 million was left on the chancellor’s table annually by charities which could potentially have claimed.
Gift Aid is a straightforward scheme which is easy to administer once the basic principles have been grasped.
Value of Gift Aid
Section titled “Value of Gift Aid”Gift Aid is repaid by the Government at basic rate, an effective rate of reclaim of 25%.
Who can claim Gift Aid?
Section titled “Who can claim Gift Aid?”Only charities can claim Gift Aid.
Registration as a charity is often, but not always, required to demonstrate charitable status. More information on this is available in our guide to charitable status.
What can be Gift Aided?
Section titled “What can be Gift Aided?”A variety of fund raising sources qualify for Gift Aid, although in all cases the funds must have been received from individual UK taxpayers making suitable declarations allowing the reclaim.
Common sources are as follows:
- monetary donations, any size
- ‘donation only’ events
- charity auctions
- volunteer expenses
- sale of goods on behalf of an individual
With anything other than a straightforward donation of money, it is important to read the rules on these measures to ensure compliance, particularly the section on HMRC’s website about providing benefits in return for donations: https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on.