Tax Effective Giving
If you are a UK taxpayer, Gift Aid offers a simple way to increase the value of your gift to TreeHouse by allowing the charity to reclaim the tax on your gift.
What is it?
Gift Aid is one of the simplest and most effective ways of giving to charity. Using Gift Aid means that for every pound you give, the charity you are supporting will receive an extra 28 pence from the Inland Revenue. This means that a £10 Gift Aid donation, is worth £12.80 to the charity - imagine what a difference that could make to the charity you support, and it doesn't cost you a thing.
On top of this, higher rate taxpayers are eligible to reclaim as much as £23 from the taxman for every £100 donated to charity, by including details of their Gift Aid donations on their Self Assessment form.
How does it work?
Gift Aid is surprisingly easy to use. Gift Aid can apply to donations of any amount, large or small, by cash, cheque, postal order, direct debit, standing order, debit or credit card or even in a foreign currency (including the euro). If you are a UK taxpayer, all you have to do is give the charity a simple gift aid declaration. What's more - one single Gift Aid declaration can apply to all past donations you have made (since April 2000) and to all future donations you make.
The following table shows how you could increase the value of your gift to TreeHouse, at no extra cost to you:
| Your donation |
Gift aid |
Total value of your gift |
| £10 |
£2.82 |
£12.82 |
| £50 |
£14.10 |
£54.10 |
| £100 |
£28.21 |
128.21 |
| £500 |
£141.03 |
£641.03 |
| £1,000 |
£282.05 |
1,282.05 |
In addition, if you are a higher rate tax payer then you can reclaim some of the tax you have paid on your gift by entering the donations in the gift aid box on your self assessment tax return. The following table shows how you could increase the value of your gift to TreeHouse and personally reclaim some tax, at no extra cost to you:
| Your donation |
Gift aid |
Total value of your gift |
Amount you reclaim |
| £10 |
£2.82 |
£12.82 |
£2.31 |
| £50 |
£14.10 |
£54.10 |
£11.54 |
| £100 |
£28.21 |
128.21 |
£23.08 |
| £500 |
£141.03 |
£641.03 |
£115.38 |
| £1,000 |
£282.05 |
1,282.05 |
£1,153.85 |
Example
This case study shows how Gift Aid is calculated:
Katie Jones makes a donation of £100 to TreeHouse. TreeHouse grosses up the value of the gift, and multiplies the donation amount by 22/78 (or 28%) to calculate the tax it can reclaim, as follows:
£100 (donation) x 22 (Basic rate of income tax) = £28 tax relief to TreeHouse
78 (100 minus the basic rate)
If Katie is a higher rate taxpayer, she will want to calculate the tax relief she can claim. She is eligible to claim the difference between the higher rate of tax (40%) she has paid, and basic rate tax (22%) reclaimed by TreeHouse (40% – 22% = 18%). Therefore, Katie simply works out the gross value of her gift to TreeHouse (£100 + £28 = £128) and calculates 18% of that figure to calculate the tax relief she is entitled to reclaim:
£128 (gross donation) x 18% = £23 tax relief to donor
Therefore, Katie reclaims 23% of the cost of her initial £100 donation.
For more information on tax effective giving, please visit the website DirectGov or The Giving Campaign.
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