What is Gift Aid and how does it work? Gift Aid is a scheme introduced by the government to encourage donations to charities. Gift Aid enables charities to claim back tax from the Inland Revenue on donations made by individuals. By Gift Aiding your donations, the amount you give will be increased by 25% at no extra cost to you. Once you have completed the Gift Aid declaration overleaf there is nothing more you need to do. We will contact the Inland Revenue and collect the tax on your behalf.
How do I know I have paid enough tax? For people currently in employment it will normally be easy to determine if you have paid enough tax to cover the amount the DSA will reclaim. That tax paid can be income tax or capital gains tax and can include tax paid on savings. To work out if you’ve paid enough tax to cover your donations, divide the donation by four eg. If you give £100 in a particular tax year (6 April - 5 April) you will need to have paid £25 tax over that period (based basic rate tax of 20%).
Why do I need to give a declaration? By providing us with a declaration you give us the authority to reclaim tax you have already paid to the Inland Revenue. By making the declaration you are confirming that you understand this.
Do I have to make a declaration with every gift? No. The declaration wording normally covers present, future and past donations. We can back-claim four years and we will continue to claim until you tell us otherwise, so long as you are eligible.
Am I committing to future donations by signing this declaration? No. There is no obligation for you to continue to make donations to the DSA. You can also cancel your declaration at any time by writing to us.
What if my circumstances change? If you no longer pay tax on your income and/or capital gains equal to the tax that the DSA reclaims, you should contact the DSA to cancel your declaration. You should also inform us of any changes to your name or address.
What if I am a higher rate taxpayer? If you pay higher rate tax, you can claim the difference between the higher rates of tax (40 and/or 50 per cent), and the basic rate of tax (20 per cent), on the total ‘gross’ value of your donation to the charity or CASC. For example, if you donate £100, the total value of your donation to the charity is £125 – so you can claim back: • £25 – if you pay tax at 40 per cent (£125 at 20 per cent) • £37.50 – if you pay tax at 50 per cent (£125 at 20 per cent plus £125 at 10 per cent) You can make this claim on your Self Assessment tax return.
Does it make a difference how my gift is made? You can make payments by cash, cheque, postal order, standing order, debit or credit card and as long as you have signed the declaration overleaf we will be able to reclaim the tax.
What if I’m a pensioner? Gift Aid can only be reclaimed on donations from taxpayers. As a pensioner you may still pay tax on a savings account or on a private pension, or pay capital gains tax if you sell property or shares. If the tax you pay in this way is at least equal to the tax we will reclaim (see above) Gift Aid can apply to your donation.
If you are still unsure about the Gift Aid scheme and how it applies to you please contact the Down’s Syndrome Association or your local tax office and ask for leaflet IR 113.