How to Claim Gift Aid Through Self-Assessment

Maximising Tax Relief on Charitable Donations

HMRCSELF ASSESSMENTGIFT AID

The Tax Faculty

10/25/20245 min read

Donating to charity is a powerful way to support the causes you care about, and with Gift Aid, you can help your donation go even further. Gift Aid allows charities and community amateur sports clubs (CASCs) to claim an additional 25p for every £1 you donate, amplifying the impact of your contribution without any extra cost to you. But did you know that, if you’re a higher-rate taxpayer, you can also claim back the difference in tax through self-assessment? Here’s everything you need to know about making the most of Gift Aid through self-assessment.

Understanding Gift Aid: Boosting Your Donations

When you make a donation under Gift Aid, the charity can claim an extra 25% of your donation’s value back from the government, provided you’ve paid at least that amount in tax in the relevant tax year. For example, a £100 donation becomes £125 for the charity with Gift Aid applied.

Who Qualifies?

Gift Aid can be applied to most types of donations, but not all payments qualify. To ensure your donation counts, you’ll need to complete a Gift Aid declaration form provided by the charity or CASC. It’s also essential to verify that the organisation has a valid HMRC charity reference number.

How to Ensure You’re Eligible for Gift Aid

To qualify for Gift Aid, you need to:

1. Pay enough tax: Your donations must not exceed four times the amount of tax you’ve paid in a given tax year.

2. Provide a declaration: Fill out a Gift Aid declaration form for each charity you support.

If you stop paying sufficient tax to cover your donations, notify the charity to prevent any discrepancies, as HMRC may require additional tax to cover any over-claimed Gift Aid.

brown gift box on white surface
brown gift box on white surface
Claiming Gift Aid Through Self-Assessment

If you’re a higher-rate taxpayer, Gift Aid offers an additional tax-saving opportunity. While the charity reclaims the basic rate (20%), you can claim back the difference between the higher rate (40% or 45%) and the basic rate through your self-assessment tax return.

Example of a Gift Aid Claim

Suppose you donate £100 to charity. The charity claims Gift Aid, raising the donation to £125. As a 40% taxpayer, you can claim back 20% of £125, which is £25. This extra relief reduces your tax bill, rewarding your generosity with valuable savings.

Claiming Gift Aid Early Through Self-Assessment

Self-assessment normally only applies to the previous tax year, but with Gift Aid, you can also claim for donations made in the current year if:

• You prefer to claim the tax relief sooner.

• You were a higher-rate taxpayer last year but won’t be this year.

Simply include these donations in your current self-assessment return to receive immediate tax relief. Note that if you miss the self-assessment deadline (31 January for online or 31 October for postal submissions), you’ll miss the chance to claim for the current tax year.

Keeping Accurate Records for Gift Aid Claims

To ensure smooth tax filing and avoid HMRC queries, maintain a clear record of:

• Donation amounts and dates: Track each Gift Aid donation with receipts or confirmations.

• Charity details: Keep a list of charities you’ve donated to with Gift Aid, as well as their HMRC charity reference numbers.

• Relevant tax years: Note the tax year for each donation, especially if you plan to claim for current-year donations.

If you’re claiming Gift Aid on donations of £10,000 or more, HMRC will request additional details, including the specific date of the donation and the charity name.

Additional Gift Aid Considerations

Donations Through Payroll Giving

If your employer or pension provider offers Payroll Giving, donations are deducted before Income Tax, making it a convenient way to support causes. National Insurance contributions, however, still apply to Payroll Giving donations.

Married Couple’s Allowance and Gift Aid

For those eligible for the Married Couple’s Allowance, Gift Aid donations could increase your allowance. If you file a self-assessment return, the adjustment happens automatically; otherwise, notify HMRC directly.

Conclusion

Donating through Gift Aid offers an incredible way to maximise the value of your charitable contributions while providing tax benefits through self-assessment. By following these steps, you can support your favourite causes and benefit from tax relief, all while staying compliant with HMRC’s guidelines.

If you’re ready to claim Gift Aid through self-assessment or have questions about your eligibility, The Tax Faculty is here to help. Our experts can guide you through the self-assessment process, ensuring you claim the tax relief you deserve. Reach out today for personalised tax advice and let us help you make the most of your charitable giving.

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

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Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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