The Gift Aid scheme is for gifts of money by individuals who pay UK tax. Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities take your donation – which is money you have already paid tax on – and reclaim the basic rate tax from HMRC. on its “gross” equivalent – the amount before basic rate tax was deducted.
Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it is worth £12.50 to the charity.
To donate through Gift Aid, simply complete the declaration confirming that you are a taxpayer and you are happy for us to claim tax relief on your donation.
If you pay higher rate tax, you can claim the difference between the higher rate of tax (40 per cent) and the basic rate of tax (20 per cent) on the total (gross) value of your donation to the charity.
For example, if you donate £100, the total value of your donation to the charity is £125 – so you can claim back 20 per cent of this (£25) for yourself. You can make this claim on your Self Assessment tax return if you were sent one.
Payroll Giving, or Give As You Earn as it sometimes known, is one of the most easiest and most tax effective way for an employee to give regular or one-off donation direct from their salary (monthly or weekly) to one or more charities.
It is simple to set up – all you need to do is to instruct your payroll department to make the deductions from your salary to your chosen charity or charities.
Your donations will be deducted before tax is calculated, so it will cost you even less. These deductions will then show up on your monthly or weekly salary slips.
If a donor pledges £10, it will cost them £8 as a basic rate taxpayer (or £6 if they are a high rate taxpayer) due to the fact it is being taken from their pre-tax salary. So unlike Gift Aid, the tax relief is given to the donor, who gets an immediate tax relief of up to £4 for every £10 donated.
Some employers offer a matched giving scheme, so the amount you donate could be worth double.
Legacy giving is making a donation to charity in your will, often referred to as a bequest.
Legacy giving is also tax efficient. Free of inheritance tax, a donation made in your will can also help reduce the tax burden on your estate.
To leave a legacy to a charity like OAUK, you simply need to include details of the donation in your will. Your solicitor or professional adviser can advise you more on this matter.
Please contact us if you wish to make donation by any other method.