Please help me understand Gift Aid

[tnorfotkcabb]

I would like to give a percentage of my income to charity, let's say 3%. I pay tax at the basic rate, so the charity could claim Gift Aid on my donations.

For the sake of argument, 3% of my gross annual income = £10. So in order for my donations to charity to equal 3%, should I donate £8 and then they claim back the other £2 via gift aid (as I will already have paid it in tax), or should I donate £10 from my take home pay and they claim gift aid on top of that?

I'm confused!

Do you pay tax at basic or higher rate?

@FrivolousTreeDuck basic rate

You want to donate 3% so do that. If you reduce it to take account of the tax you aren't donating 3%. Also you might take into account that reclaiming the tax is work for them so costs some of the extra.

The charity just claims tax back on what you have donated. You pay what ever the amount is that you want to give from your salary. You must complete a gift aid form and ensure that you have paid sufficient tax to cover all gift aid, including donations of items to shops etc as you can be asked to pay additional amount if you haven’t paid enough in any tax year.

In your example, to donate 3% of your gross salary, give them £8.

If you want the charity to have 3% (£10) of your gross income, then give them £8 and they claim the £2.

But if you want to donate 3% of your gross income give them £10.

Further question to those that understand a museum charges £9 standard entry £10 giftaid and says there is a £1 voluntary contribution as part of that. Does that mean that the giftaid is only for the £1?

No. This 'voluntary contribution' is just a way of them getting you pay a higher price for the ticket.

Gift aid is always 20%.

If you pay £10 to a charity, the government will give you the basic rate tax back you paid on that money. £2.

You could claim that back yourself but few people do. So charities step in and have an agreement to claim it back on your behalf and then keep it.

Yes, the gift aid is only on the voluntary part. You don’t get gift aid on entrance fees because it’s not a gift, it’s payment for a service.

https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on#when-you-cannot-claim-gift-aid

This is all wrong, I’m afraid. Basic rate gift aid can only be claimed by the charity- higher rate can be claimed by the taxpayer.

It can only be claimed on the voluntary contribution, not the whole entrance fee.

But only up to the amount of tax you've paid.

To make it all easier you can do give as you earn... that means HR take your donations off you payslip before you pay any tax

Gift aid is 25% not 20% and charities can claim it on basic tax rate assuming they have a valid declaration from you. Higher rate tax payers can offset or claim back gift aid of donations against tax owed. So if you want the charity to receive £10 the donate £7.50 and the gift aid tops it up. The declaration will cover any future donations too normally unless you withdraw your permission e.g. if your circumstances change and you no longer pay tax.

The onus is on you to make sure you’ve paid enough tax to cover the gift aid but in most cases that should be fine.

In certain circumstances gift aid can be claimed by charities offering memberships where they can be viewed as a donation and not be seen as facilities for personal use. A voluntary donation is a top up as memberships are relatively costly to offer.