What is Gift Aid and how does it work?

25 February 18


You might have recently been asked the question “do you want to Gift Aid that?” If you haven’t come across Gift Aid before then no doubt you had no idea how to respond. Gift Aid is actually a really useful tool for UK charities and one that you need to be aware of if you’re looking into online giving.


What does Gift Aid do?


Gift Aid is a form of UK tax relief aimed at charities. For every eligible donation that has been made by a UK taxpayer, where Gift Aid has been selected, UK charities are then able to claim an additional 25% in tax on each one.


What does it involve for supporters?


It’s a very simple process for anyone who is looking to support UK charities and applies equally to online giving as much as in person. Those who are donating will be required to confirm whether they are a UK taxpayer as Gift Aid is only available to those who are considered UK taxpayers for the purposes of UK law. There aren’t many rules that apply to Gift Aid, however, income or capital gains tax must be paid by the supporter at a rate at least equal to the amount reclaimed on their donations in the current tax year.


When does Gift Aid not apply?


There are a number of situations in which it won’t be possible to apply Gift Aid to charity donations. These include:


  • Donations that are made in return for tickets e.g. for a raffle. As the supporter is getting something in return for the donation, Gift Aid won’t apply.
  • Donations made on behalf of someone else – this is because, for Gift Aid to apply, the identity of the UK taxpayer making the donations needs to be known.
  • Donations that have been made by companies – Gift Aid only applies to individual donations.
  • Donations that are made to a close family member if a charity is involved in covering some of the costs – for example, if you have a sibling who is raising money to fund work overseas and the charity they are going with is covering their living costs, any money you contribute won’t be eligible for Gift Aid.


What happens if Gift Aid isn’t applicable?


Gift Aid can be removed retrospectively if not applicable. However, the donation itself is still sent to the intended charity and is not affected.


What about overseas supporters?


You don’t have to live in the UK to be able to add Gift Aid to donations. However, it will only apply to donations that have been made by UK taxpayers, no matter where in the world they live.


Is there a benefit for the supporter?


For supporters who are higher rate taxpayers there is the option to claim tax relief on the amount of the gross donation made at 20%. It’s important for taxpayers to keep a copy of donation history so this can be printed out and attached to the tax return at the end of the tax year.


Gift Aid is just one way that you can optimise your online giving campaign – find out more about how a give.net page could make it easier for your supporters to give and get your campaign started today.