Gift Aid is a UK government tax scheme, which enables the University to claim tax relief on charitable donations from UK tax payers. Gift Aid increases the value of your gift by nearly a third – at no cost to the donor.
How it works
Gift aid donations are regarded as having basic rate tax deducted by the donor. The University of Cumbria can reclaim the basic rate tax from HM Revenue and Customs on its ‘gross’ equivalent – the amount before basic rate was deducted.
Basic rate tax is currently 20 per cent, so this means that for every £1 donated using Gift Aid, the University of Cumbria can claim an additional 20p from HM Revenue and Customs
Who can donate through Gift Aid?
UK Basic Rate Taxpayers
If the amount of UK tax you pay in a single tax year (6 April one year to 5 April the next) is at least equal to the amount of tax the University of Cumbria can reclaim, then you can Gift Aid your donation.
If you make a number of Gift Aid donations, you will need to consider the tax you’ve paid on each donation on an accumulative basis.
You don’t necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you’ve paid could include:
- tax deducted at source from savings interest
- tax on State Pension and/or other pensions
- tax on investment or rental income
- Capital Gains Tax on gains
But only UK tax counts, so if you only pay tax outside the UK you won’t be able to use Gift Aid.
Higher Rate Tax Payers
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 University of Cumbria.
For example, if you donate £100, the total value of your donation to the University of Cumbria 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.
For more information check out the Gift Aid website.