Gift Aid is a government program that allows certain taxpayers to enjoy increased value from their donations to eligible UK charities. Depending on how much their annual taxes are, they may enjoy certain tax incentives as well. However, if you are using tax software to file your taxes, make sure that it has been updated recently to be able to file Gift Aid donations as well.
Conditions for eligibility
If you are looking for charities that are eligible to receive donation gifts under the Gift Aid program, make sure that the charitable organisation is registered with the HMRC and is based either in the UK, EU, Iceland or Norway. If you are unsure, visit the HMRC website to inquire. As for taxpayers, you must be a UK taxpayer to qualify for Gift Aid. Secondly, while you do not have to work to enjoy tax benefits offered by this program, whatever type of tax you pay should at least be equal to the amount that the charity is entitled to claim.
How Gift Aid works
If you would like to start donating to charity now, here is what you can do. Step 1: Look for a charitable organisation that is registered with the HRMC. Step 2: Inform the organisation that you want to make a Gift Aid donation. Step 3: Fill up the form the organisation will provide you with. This form is known as a Gift Aid declaration and will basically include your complete name and address, as well as the name of the charitable organisation you are donating to. All other crucial details – not limited to the amount – of your donation should also be noted. It should also be labelled as a Gift Aid donation.
How higher taxpayers can claim additional benefits
You should keep in mind that you are entitled to enjoy greater tax incentives if your tax rate is higher than the basic rate (20%). You must, however, make note of your donation in your self-assessment form. If you have not got one, inform the HMRC about it.
Types of donation
Cash donations are not the only way to make a Gift Aid donation. There are also other ways for you to help charity foundations if a cash donation is inconvenient. You can also arrange for automated or scheduled donations through the following: 1. Authorising your company to automatically deduct a certain amount from your wages for donation 2. Authorising your bank to deduct a specified amount from your pay 3. Using your tax refunds as donation