If you pay UK income tax and make a donation, the charity or Community Amateur Sports Club (CASC) can claim back the income tax you have paid on the amount you donate. At the current basic rate of income tax (20%) this means:
A donation of £10 would be worth £12.50 with Gift Aid, £100 would be worth £125 and £1,000 would be worth £1,250!
There is paperwork involved for charities and CASCs in claiming back income tax – it all needs to be in writing and there are plenty of forms to complete for HMRC but this is usually worth the time in the long run – it’s easier for example, than spending more time on increasing donations. You can also use it in your charity’s marketing to encourage people to give and show you’re valuing their donations.
Find out more about claiming Gift Aid or contact the HMRC Charities Helpline on 0300 123 1073 (open from 8am to 5pm, Monday to Friday).
Groups with an income of less than £5,000 a year can only register as a charity with the Charity Commission if they chose the Charitable Incorporated Organisation (CIO) legal structure. Remember, groups with exclusively charitable objects and an income of over £5,000 a year must register.
Advice from HMRC "You don't have to register to claim Gift Aid but your charity must be recognised by HMRC as a charity for tax purposes. Recognition by HMRC as a charity is a separate process from registering with the Charity Commission as a charity.”
Find out how to apply to HMRC to be recognised as a charity for tax purposes.
The Institute of Fundraising has produced guides to tax-effective giving which can include more than Gift Aid – read more about how it can cover gifts of shares, land and property, legacies and giving by business.