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How Gift Aid Benefits Both You and Charities

Let's explore this concept further and see how charity accountants in London can help you maximize your charitable giving.

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How Gift Aid Benefits Both You and Charities

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  1. How Gift Aid Benefits Both You and Charities Gift Aid allows you to get tax relief on donations while giving the receiving organization additional funds. Let's explore this concept further and see how charity accountants in London can help you maximize your charitable giving. How does it work? When you choose to Gift Aid a donation, both you and the charity stand to gain. This tax relief scheme allows charities to claim an extra 25p for every £1 you donate, so your donation is effectively worth more to the charity. As a UK taxpayer, you can claim tax relief on the gross amount of your donation. This mutual benefit makes Gift Aid a valuable option for anyone looking to support their favourite causes while also enjoying some financial perks. Here's an example:

  2. Imagine Ben, who earns £60,000 annually and pays a higher rate of tax. He decides to donate £1,000 to a charity in the 2023/2024 tax year and opts to apply Gift Aid. Thanks to this choice, the charity gets more money as they can claim an additional 25% of Ben's donation from the government. So, the charity receives £1,250 in total. When it's time for Ben to prepare his tax return, the total amount of his donation (including the Gift Aid) is considered. This makes the gross donation amount £1,250. Because Ben is a higher-rate taxpayer, he can claim back the difference between the higher rate of tax (40%) and the basic rate (20%) on this gross donation. The difference in tax rates between higher (40%) and basic (20%) is 20%. Therefore, Ben can claim 20% of £1,250 as his tax relief, which amounts to £250. This effectively reduces the cost of his donation to £750 (£1,000 - £250), making his charitable contribution not only generous but also financially savvy. How to claim To receive tax relief on donations, individuals need to fill out a declaration at the time of contributing. Typically, if the charity is registered, there is an option to easily “tick a box” during the donation process. Professional charity accountants in London can help you claim the right amount of Gift Aid. Call Allenby Accountants today at 0208 914 8887.

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