Gift Aid is the basic tax which charities can claim back on donations made to their charity, where the individual donors have already paid income tax.
A £100 donation from an individual is worth £125 to the charity if Gift Aid is claimed. This is because basic tax is paid at 20%, so the tax paid by the individual would have been £100 x 20/80 = £25. The charity can reclaim this tax.
There are 3 conditions which must be met before the charity can claim the Gift Aid:
- The charity must be recognised as a charity by HM Revenue & Customs. (This does not mean that it must be registered at the Charity Commission.)
- The charity is responsible for obtaining and retaining declarations for any donations on which Gift Aid is claimed.
- There are specific limits about any benefit which the donor may receive as a result of their donation.
The Gift Aid Small Donations Scheme (GASDS) means that eligible charities can claim a top-up payment on cash donations of £20 or less without the need to collect Gift Aid declarations. Charities will generally be able to claim on small donations of up to £5,000 per year. Claiming for £5,000 of small donations will result in a repayment of £1,250 for the charity. (The threshold is due to be increased, enabling claims relating to £8,000 of small donations, yielding £2,000 repayment from April 2016.)
For help with Gift Aid and more
A range of services provided by WYCAS (West Yorkshire Community Accounting Service) are available to help your organisation claiming Gift Aid and GASDS including Gift Aid, GASDS and Charities on line: A Good Practice Guide. To find out more contact WYCAS.
WYCAS have been a great help to us, in setting up the system for reclaiming Gift Aid - and advising us how we can take advantage of the Gift Aid Small Donations Scheme. This provides more money for running the annual arts Festival."
Chapel Allerton Arts Festival