Are you getting the most from gift aid?
I understand that a number of our clients make donations to charities or Community Amateur Sports Clubs through the use of Gift Aid. The advantage of gift aiding contributions is that the charity can reclaim the 20% basic rate tax you paid thus enhancing the contribution you are making. This means that if you make a £80 contribution, the charity reclaims £20 from HMRC (considered a £100 gross contribution) meaning that they get a 25% uplift on your contribution.
One thing that I do regularly find when I am talking to high-rate taxpaying clients is that they do not know whether they are paying anything through gift aid. This surprises me because they would know if they also were claiming relief. Whilst the charity or CASC can reclaim the basic rate tax, the balance to 40% can be reclaimed by the donor if they are high rate taxpayers, which means that in the example above, a reclaim of a further £20 can be made thus having the effect of reducing the cost of your charitable contribution to £60. The claim for relief is applied for on your tax return, so please make sure that you are making the best use of this tax break.
You shall find that usually charitable subscriptions as well as donations can be gift aided and usually all you need to do is tick a box. If you are not sure whether your subscription can be gift aided or indeed if you are already gift aiding, contact the charity involved and they will, I’m sure, be only to happy to help you. For more information please refer to the guide produced by HMRC.
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