Client questions
There are many financial issues facing us all in the UK today; an ageing population, pressure to consume, insufficient saving, incomprehensible financial products and services, whilst to top it all there are very few places to turn for truly impartial advice.
This section of our website aims to answer some of the questions we are commonly asked by clients. We hope you find what you need, but if not why not have a look elsewhere on our site or e-mail us your question using our enquiry form.
Q - How does Gift Aid work?
If you are thinking about making a gift to charity, you should consider the benefits of tax-efficient giving. This can either make it cheaper for you to donate to charity or can mean that your chosen charity receives more money, at no additional cost to you.
If you pay tax in the UK, Gift Aid is a simple way for you to increase the value of your gift to your chosen charity. By making your donation using Gift Aid, your charity will be able to reclaim basic rate tax on your gift to them. Therefore, if you make a £500 donation during the current tax year, your chosen charity will actually receive £625.For most people it will normally be very easy to know whether you have paid enough tax to allow the charity to claim the basic rate tax relief. The tax that you have paid can be income tax or capital gains tax at any rate and can include tax paid on savings and income.
In addition, if you are a higher rate taxpayer, you can claim relief on the difference between the basic and higher rates of tax. In the above example, this would mean that a higher rate taxpayer could reclaim 20% of £625, equating to £125. Since April 2004 it has been possible to gift this balance to the charity of your choice meaning that your original gift is worth even more to your charity.
Please refer to the Inland Revenue’s guide (IR65) for further details.
Evolve - November 2009
