Gift Aid is a simple way for the church to reclaim tax on any donation you give and is a significant boost for parish funds. Gift Aid means for every £1 you donate the government gives another 28p.
All you need is to be a UK tax payer and to complete a simple form.
How does Gift Aid work?
UK charities receive your donation – which is money you’ve already paid tax on – and then reclaim basic rate tax (at 20%) on its ‘gross’ equivalent (the amount before tax was deducted) from the Government.
Between 6 April 2008 and 5 April 2011 the charity will also get a Government supplement of 3p on every pound you give.
In practice, this means that if you give £1 to charity using Gift Aid, that gift is worth £1.25 + 3p supplement = £1.28 to the charity.
If you pay higher rate tax, you can claim the difference between the higher rate of tax at 40% and the basic rate of tax at 20% on the total value of your donation to the charity. You can make this claim on your Self Assessment tax return or form P810 Tax Review if HM Revenue & Customs have sent one to you. If you complete a tax return and are due a refund you can ask HM Revenue & Customs to treat all or part of it as a Gift Aid donation.
If you claim the age-related Personal Allowance, age-related Married Couple’s Allowance or Tax Credits it’s important to HM Revenue & Customs know about your Gift Aid donations. This is because they will subtract the amount you donate plus the basic rate tax from your total income and use the reduced figure to work out the value of your allowances or tax credit. This may have the effect of increasing these allowances or credits if your income was above the relevant ‘income limit’ that applies.
For more information, see www.hmrc.gov.uk/incometax/relief-gift-aid.htm and have a word with one of the priests.