Gift Aid

Pace / Pace Charity / Gift Aid

Tax benefits with Gift Aid

Gift Aid is a scheme run by HMRC that allows charities to claim an additional 25% on the donations you have given. And the best bit is that it doesn’t cost you a penny!

To Gift Aid your donation you have to be a UK taxpayer, at the standard rate or higher rate. You have to pay enough tax to cover the amount that the charity will claim in one year.

For example, if you donate £8.50 a month (£102.00 per annum) in any one year, Pace will claim an additional £25.50 from HMRC on your behalf, at no extra cost to you. Gift Aid makes your donation go even further, with £25 paying for an hour of hydrotherapy for a child with cerebral palsy.

See the table below, which illustrates the benefits of the tax relief at different tax rates.

Gift Aid for higher rate taxpayers

Higher rate taxpayers can reclaim a proportion of higher rate tax on their gifts through their self assessment tax return or by asking HMRC to amend their tax code. For a 45% tax (additional rate taxpayer) an effective total donation of £12,500 costs only £6,250 to the individual.

If you would like to discuss Gift Aid or the tax benefits of donations, please contact Caroline Bennett on 01296 616981.

The table below illustrates the benefits of the tax relief at different tax rates.

Tax bracket Donation Charity claims Gift Aid Total Donation Donor reclaims via tax return Net cost to donor
Basic rate (20%) £ 10,000 £ 2,500 £ 12,500 £ – £ 10,000
Higher rate (40%) £ 10,000 £ 2,500 £ 12,500 £ 2,500 £ 7,500
Additional rate (45%) £ 10,000 £ 2,500 £ 12,500 £ 2,500 £ 6,875