Gift aid donation


The pandemic had a significant impact on the philanthropic sector. Many nonprofits saw a significant decline in income and donations. Many businesses struggled to keep up with the demand for their services. Some were even compelled to shut their doors.

Given this, there’s never been a better moment to dig deep and provide a helping hand to your favourite causes. Because of the link between tax and Gift Aid, your gifts may potentially help you save money on your taxes!

What do you mean by Gift Aid?

Charities and Community Amateur Sports Clubs can take advantage of the Gift Aid system (CASCs). You can complete a Gift Aid declaration if you are a UK taxpayer and give it to a charity or a CASC. This enables the charity or CASC to claim 25p for every £1 donated. You’ve already paid a 20% basic rate tax on £1.25, so the 25p is comparable.

What donations are eligible for Gift Aid?

If you are a UK taxpayer, your gifts are tax-deductible. Your gifts, however, must not exceed four times what you pay in taxes over the year. Income tax, capital gains tax, or a mix of the two may have been paid.

You’ll have to reimburse the additional money your selected charity has claimed if you don’t pay enough tax to cover your Gift Aid payments. This must be done through your yearly Self-Assessment Tax Return. So be cautious!

Tip: Get relief as soon as possible:

Individuals who make frequent gifts may be familiar with claiming tax relief, but is there a method to gain compensation sooner that many people are unaware of?

This flexibility effectively allows an individual to carry over gift aid donations made in the current tax year, up to the day they submit their return, to the prior tax year if they desire to claim relief sooner or are not a higher rate taxpayer in the current year but were in the previous year.

Trap: What if you haven’t paid enough tax?

However, if you haven’t paid enough tax, be mindful of the restrictions. This is essential to keep in mind for the current tax year, especially if an individual’s income has been affected by Covid-19 and is now lower.

When a person makes a gift aid declaration, they say that they have paid enough tax throughout the year to pay the 20% tax that HMRC will recover from the charity. If it is discovered that the individual has not paid enough tax, they will be required to make up the difference!


This page covers the most important components of gift aid donations. However, there are other requirements to follow regarding charity donations and presents. Call McCarthy Browne  on 01202 287424 for further help! We would always advise seeking counsel, especially if there is a large gift to be made. From tax recommendations for filing your tax returns to advice on more complicated tax planning for the future, our tax team offers a lot of experience.