Gift Aids work in the way that you make a donation each year and the charity can claim back tax on your donations so for example if you made a donation of £100 the charity would be able to claim back £28 on that donation making your total donation worth £128. There are many different charities and groups that you can donate to but the way in which they work tends to be the same it works by;
- You first have to decide who you want the donation to be given to there are many charities and groups so make sure you research to find the one you would like to donate to.
- Before actually choosing a charity you may be best checking how much tax you actually pay and ensure it is enough for the charity to claim back out of. If you don’t pay enough tax each year to cover the payments then you would not be able to take out a Gift Aid for that amount, you would have to reduce the amount you pay the charity so the amount they claim back would be less.
- Once you have decided which one you would like to donate to you will have to complete a declaration with the charity or group stating that it has been agreed that they can claim back your tax. This declaration should include your name, address, the name of the charity or group and the amount that you will be donating and there fore how much they should be able to claim back from each donation.
- Then once the declaration and account has been set up then you will pay a set amount each year or monthly payments can be arranged. If you have any queries at any time you would just have to contact the charity directly not the Inland Revenue, for example if you wanted to stop donations you would have to contact the charity to cancel the declaration.
- Once the declaration has been received by the Inland Revenue your payments will start and the charity will then be able to claim back your tax on top of your donations.
- One of the advantages if you are a high band tax payer is that although the amount of tax you pay is more the charity can still only claim back 22% of your donation. This means because you pay 40% tax you can claim back the extra from the Inland Revenue, so you would have to contact the Inland Revenue to find out more details.
There was a time when you could only make donations of £600 or more, however, this was revised in 2000 when they changed the rules so there is now no minimum donation required. Make sure you take your time in deciding which charity you donate to and ensure you are only donating that much you can afford and so there fore the amount they are claiming back is covered by how much tax you pay.