What is Gift Aid
MAKING GIFTS GO FURTHER
Thanks to Gift Aid every pound given to charity can be worth an additional 25p and at no extra cost to the donor.
HOW TO SIGN UP FOR GIFT AID
All you have to do is to complete a simple Gift Aid declaration form to confirm you are a tax payer.
HOW DOES GIFT AID WORK?
Gift Aid is one of the easiest ways to make your donation tax effective. Magen David Adom UK (MDA UK) will reclaim the basic rate tax from HMRC for you. The more you give the more we can claim back. There is no fixed amount and there is no extra cost to you. All you have to do is make a Gift Aid declaration.
WHAT IS A GIFT AID DECLARATION?
It is simply a statement by an individual taxpayer that they want a charity to get back from HMRC the tax paid on their donation. This is a great way to add 25% to the value of your gift to MDA UK without it costing you a penny!
WHAT DOES THE GIFT AID DECLARATION COMMIT ME TO?
Absolutely nothing! It just ensures that if you choose to donate to MDA UK, we can claim an extra 25% back from HMRC.
DO I QUALIFY FOR GIFT AID?
For every £1 you donate to MDA UK in a financial year (from 6 April to 5 April of the following year), you must have paid 25p in income or capital gains tax in the same financial year to qualify for Gift Aid.
HOW DO I KNOW IF I PAY UK INCOME OR CAPITAL GAINS TAX?
You pay these taxes if:
- income tax is taken from your wages or salary before you receive your pay
- you pay tax after filling in a self-assessment form each year
- you have any taxable savings, a pension plan, or investment income
- you have paid any capital gains tax, on the sale of a property or some shares, for instance.
NB Inheritance tax does not count as UK income or capital gains tax.
If any of these applies to you, please complete a Gift Aid declaration so that MDA UK can reclaim the tax on your donations.
WHY DOES IT WORK OUT AT 25P FOR EVERY £1?
Although basic rate tax is currently 20%, a donation of £1 is treated as the net after tax, from £1.25 (£1.25 minus 20% is approximately £1). Therefore MDA UK get back the original 25p.
HIGHER RATE TAX PAYERS BENEFIT MORE
MDA UK can only directly claim back at the basic rate but please complete and return the declaration anyway.
However, as a higher rate taxpayer, if you declare your donations on your tax return, you can claim a rebate for yourself based on the difference between the higher rate and the basic rate (i.e. 40% less 20%) when you fill in your self-assessment form, so it saves you money too.
For example, if a higher rate taxpayer makes donations totaling £100 over a year, on top of the £25 that MDA UK claims back directly, you can reclaim as much as £25 from the taxman.
These figures are based on the current tax rate of 20% and can simply be adjusted if the rate changes in the future.
WHAT IF I’M A LOWER RATE TAX PAYER?
If you pay a lower rate (10 per cent or 20 per cent), MDA UK can still claim back 25p for each £1 you donate, provided you pay enough tax to cover the claim in the tax year you make the gift(s).
COMPANIES CAN USE GIFT AID TOO
It works in a different way though. Instead of enabling charities to claim the tax back from the Inland Revenue companies can include the donations on their tax returns. These donations are then set against the company’s tax bill so they save money.
WHAT IF I DON’T PAY UK TAX?
Then, unfortunately, you are not able to make a Gift Aid declaration. If you want us to make a note of this on your records, please let us know by contacting us.
WHAT IF I’M A PENSIONER?
You may still pay tax on a private pension plan or a savings account, or pay capital gains tax if you sell property or shares. If so, please complete the Gift Aid declaration.
CAN GIFT AID BE APPLIED TO EVENTS SPONSORSHIP?
Yes, in most cases – please see sponsorship forms for more details. If you are being sponsored or sponsoring someone else, for example someone running the London Marathon for MDA UK, please Gift Aid eligible contributions. Remember each sponsor needs to include their home address and postcode to enable MDA UK to reclaim the tax.
HOW LONG DOES THE DECLARATION LAST FOR?
The Gift Aid 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.
WHO WILL HAVE ACCESS TO INFORMATION ABOUT ME?
Only MDA UK and HMRC. We will not share it with anyone else.
WHAT SHOULD I DO IF I WANT TO CANCEL MY DECLARATION?
If your tax status changes and you would like to cancel your declaration, please let us know by contacting us.