If you agree to make your donation under gift aid, this will allow the charity to claim an extra 28% on top of your donation from the HM Revenue & Customs. This means that for every £1 you donate, DEC can claim an extra 28p direct from the UK Government. This increased percentage is a result of the transitional arrangement available until 5 April 2011, announced on 12 March 2008 when the basic rate of tax rate fell from 22% to 20%.
You must give the charity concerned a Gift Aid declaration for any claim to become valid, and if you had made your donation orally over the telephone instead of using the website they will write to you to confirm this declaration.
One further requirement when donating under gift aid is that you must pay income tax and/or capital gains tax at least equal to the amount that charities will reclaim on your donations, so if you are not a taxpayer, you cannot make a gift declaration.
You will not receive any benefit personally if you are a basic rate tax payer, but if you are a higher rate taxpayer, you can claim the difference between the higher rate of tax of 40% and the basic rate of tax of 20% on your Self Assessment tax return. Remember to let your accountant know when he completes your Self Assessment tax return of all the donations you have made under gift aid in the tax year.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.