What is Gift Aid?

Definition of Gift Aid

Gift Aid is a scheme that allows charities to reclaim tax on a donation made by a UK taxpayer. For every £1 donated, organisations can reclaim 25p. This enables a donor to increase their donation at no extra cost.

How does Gift Aid work?

Only charities and community amateur sports clubs (CASCs) can use Gift Aid to claim back tax. Gift Aid can be claimed on most donations, but some payments do not qualify - find out more in this guide to claiming gift aid by HMRC.

Claiming Gift Aid

To claim Gift Aid, the donor must declare that they have paid at least the same amount as the donation in Income Tax or Capital Gains Tax in that [tax year[(/glossary/tax-year/)]. Following the declaration, the charity or CASC needs to claim for tax relief within four years of the end of the financial period they received it in.

Gift Aid Small Donations Scheme

The Gift Aid Small Donations Scheme (GADS) enables charities to claim 25% on cash donations of £20 or less, or contactless card donations of £20 or less collected on or after 6 April 2017. These must be claimed within two years of the end of the tax year that the donations were received.

Got questions? Ask Emily!

FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.