What is Gift Aid and who can claim it?

• A. Gift Aid lets UK taxpayers increase the value of donations by reclaiming basic-rate tax; charities claim it from HMRC
• B. Gift Aid is a tax on charities to be paid to HMRC
• C. Gift Aid is a loan program for donors to give bigger gifts
• D. Gift Aid is a government grant for charities

Answer: (A)

Gift Aid is a way to boost the value of cash donations for UK charities by reclaiming basic-rate tax from HMRC. When a donor signs a Gift Aid declaration, the charity can reclaim the tax that has already been paid on that donation, so the charity effectively receives more than the donation alone. For a basic-rate taxpayer, this means the charity can add 25p to every £1 donated, so a £100 gift becomes worth £125 to the charity. The charity, not the donor, makes the claim to HMRC, and the donor doesn’t pay extra beyond their usual tax; the donor must have paid enough tax in that tax year to cover the reclaimed amount, and the charity must be a UK charity registered for Gift Aid. Higher-rate taxpayers can also claim additional relief through their tax return, but the Gift Aid declaration itself is the charity’s claim from HMRC for the basic-rate portion. Gift Aid applies only to eligible cash donations to qualifying UK charities and not to non‑money gifts or non-UK charities.