The Gift Aid scheme has been around since 2001, and it's a great way to get more funds for charities such as Greater Change. This article will explain where Gift Aid money has come from and how it benefits charities. 

What is Gift Aid?

Gift Aid is a government scheme that allows charities to reclaim tax on eligible donations. This means that for every £1 you donate, we can claim back 25p from HMRC without costing you more!

To be eligible for Gift Aid, the donor must pay an amount of UK Income Tax or Capital Gains Tax equal to the amount of tax that all the charities and Community Amateur Sports Clubs (CASCs) donate to will reclaim on their gifts for that tax year. If a donor's income is below £12,500, they can still Gift Aid their donations but won't pay any extra tax.

Gift Aid is a scheme which lets UK charities and Community Amateur Sports Clubs (CASCs) claim tax relief on eligible donations of money. it also allows charities and Community Amateur Sports Clubs (CASCs) to claim an additional 25% on all donations made by individuals. The basic principle is that the charity or CASC will reclaim the basic rate tax you've already paid on your donation so that you're effectively doubling your contribution.

How does Gift Aid work? 

To be eligible for Gift Aid, you need to be a UK taxpayer and pay an amount of Income Tax or Capital Gains Tax at least equal to the tax deducted from your donation. The extra money from Gift Aid doesn't come out of your pocket - it's actually a tax that's been paid on your behalf by the government when you make a donation, which then gets reclaimed by us when we file our annual returns.

To be eligible for Gift Aid, the donor must pay an amount of UK Income Tax or Capital Gains Tax equal to the amount of tax that all the charities and CASCs they donate to will reclaim on their gifts for that tax year.

As a general rule, if you are paying more than £2,000 in income tax in any one year (or £5,000 if you're married), then we can claim back some or all of your gift aid donation from HM Revenue & Customs (HMRC). So if you're giving £100 each month and your monthly salary is £1,500 per month (£18k annually), then this would mean your total gift aid donation would not include any personal expenses before it gets claimed by us as Gift Aid.

If a donor's income is below £12,500, they can still Gift Aid their donations but won't pay any extra tax. So if you're donating to charity and haven't been able to claim tax relief on it, don't worry! If your income is below £12,500, you can still Gift Aid your donations but won't pay any extra tax.

Some people might think that this means their donations will only be eligible for basic rate tax relief (20%). However, if the value of any given donation is less than £5,000 (or if it's more than that but you've already maxed out your basic 20% rate), then the difference between what they donate and what they'll get back in terms of tax breaks will be given at the higher rate 40%. For example:

A donor donates £2,000 worth of goods to their favourite charity through Gift Aid. They have no other taxable income, so they only pay a basic rate of 20% tax on this amount.

Another donor donates £3,000 worth of goods through Gift Aid and has no other taxable income; however, because they have already given more than £2k through Gift Aid – which was covered by their basic rate allowance – they don't qualify for any additional reliefs on top either!

For every £1 donated under Gift Aid, the charity will get £1.25 from HMRC without costing you more. So you donate £10, and they receive £12.50 back from HMRC as well as your own donation - so, in effect, you don't pay any more tax, but your charity does. They get an extra 25% on top of what you've given them upfront.

If you donate £10 using Gift Aid, it's worth £12.50 to the charity. This is because as well as receiving your donation, we can also claim back 25p of tax from HMRC on every pound you give. The tax reclaimed is 25p per pound donated. So, if you donate £2,000 to a charity through Gift Aid, the charity will receive £2,250 (the original £2,000 plus an additional £250).

The way this works is that you tell us how much income tax you paid in the relevant financial year - which could be as little as £1 if you earn below the personal allowance - and we claim 25p from HMRC on your behalf for each pound donated. Then, at the end of each year, HMRC sends back any money reclaimed on your donations under Gift Aid within six weeks of them being claimed by charities.

You can help charities such as Greater Change by donating with Gift Aid in the UK.

It's important to note that it's worth making sure you pay enough income tax to cover the value of what you donate, or else your donation will be worth less than 100%. If this happens too often, it could mean that a charity has to give back some or all of what they've received from you in Gift Aid payments. 

Conclusion

Gift Aid is an easy way for people in the UK to contribute to the charities they care most about without it costing them any more money. And with all the good that comes from their contributions, it's a win-win situation, especially if you are a taxpayer who wants to make your money go further!

We appreciate your support at Greater Change and would love for you to consider donating through this program if possible. Please visit our donation page for more information or contact us directly with any questions you may have about how we use donations - we will be happy to answer them. 

Donating just £3 a month with GiftAid would make an amazing difference to Greater Change and help even more people out of homelessness and into long-term stability. 

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