Gift Aid - Example

With the basic rate of Income Tax at 20%, the charity reclaims 20/80ths of your gift. (Until 5th April 2011 Transitional Relief will also be paid out of approx. 3p for each £1 donated by Gift Aid.)

Example 1

During the tax year you give a total of £400 to various charities.

With the basic rate at 20%, the amount of tax the charities can reclaim is £100.00 (£400 x 20/80) plus a Transitional Relief amount of £12.82.

If you have paid tax totalling £100.00 or more then you can make the donations using Gift Aid, making your donation worth £512.82 (£400 + £100 + £12.82) to the charities.

If you have paid less tax than £100.00, you should not make the donations under Gift Aid. You can still give the money to charity and not complete a Gift Aid declaration.

I am a higher rate taxpayer. Can my chosen charity reclaim the higher rate tax paid?

No. The charity can only reclaim tax on your gift at the basic rate. If you are a higher rate taxpayer, you can claim the difference between the higher rate at tax at 40% and the basic rate of tax of 20% in your Self Assessment return.

So, in example 1 above, you may reclaim higher rate relief of £100.00 (£500.00 at 20%) on your gross donation of £500.00.

Source: based on Inland Revenue publication IR65 – Giving to Charity by Individuals (February 2004) – rates updated April 2008