Accountants are calling on people to make the most of Gift Aid for the benefit of charities.
Research from HMRC has revealed that charities miss out on £560 million of Gift Aid every year due to a lack of awareness of how the scheme works.
The vast majority of the UK population aged 16 or over (95%) have given to charity in the past 12 months generating £8.91 billion in charitable donations, however Gift Aid was added to just over half (52%) of the total value of donations and the Gift Aid amount claimed back by charities amounts to £1.16 billion
With the tax year drawing to an end on 5th April accountants want the public to make the most of Gift Aid to benefit charities.
How does charitable giving work?
1) You make your donation to the registered charity or community amateur sports club (CASC) and agree to ‘gift aid it’.
2) The charity or CASC will be able to claim 20% on top of whatever donation you make.
3) If, during the year, you pay tax above the basic rate of 20%, you can claim back the difference between the tax you have paid on the donation and the amount the charity has claimed back.
That means a higher rate tax payer can donate £75 (after tax) with the charity receiving £125 – the difference courtesy of HM Revenue & Customs.
Steve Hale from Perrys Chartered Accountants said:
Putting money in collection boxes is all very commendable but thinking a bit more about how you donate to the charity you support can bolster their funds with no additional cost to you.
Image credit: Perrys Chartered Accountants.