Increased impact, tax efficient giving, and increased credibility are all benefits of the Gift Aid Program, put in place by the UK government. This program encourages donors to give more via a tax relief incentive.
Under the program, UK income taxpayers complete a declaration that they are a UK taxpayer. Any donations that the taxpayer makes to a charity are then treated as being made after deduction of income tax at the basic rate of 20%. An important note as it relates to Gift Aid: non-UK residents can still take advantage of the Gift Aid program if they’re paying UK taxes.
The charity can then reclaim the basic rate income tax paid on the gift from HMRC (His Majesty’s Revenue and Customs). For a basic-rate taxpayer, this adds approximately 25% to the value of any gift made under this program.
The simplicity of the Gift Aid program is that it enables donors to make a declaration just once. This single declaration covers all their donations to a particular organization for as long as they are a UK taxpayer. By claiming Gift Aid on donations, charities can demonstrate that they are making the most of the money they receive, which can lend to increased public trust and credibility.
How the Gift Aid Program Works
- A UK taxpayer makes a donation to a charity that is registered with the UK government to receive Gift Aid.
- The charity creates a form with GiveWP and utilizes the Gift Aid Add-on. Personal information collected includes the donor’s name and address, and the donor must make a declaration that they are a UK taxpayer and that they want their donation to be eligible for Gift Aid.
- The donor receives a confirmation that their donation was successfully processed as well as a downloadable Gift Aid Declaration form.
- The charity uses GiveWP’s Gift Aid report to download all declaration forms in bulk in a CSV file.
- The charity claims back the basic rate tax (currently 25%) on the donation from the UK government. This means that for every £1 donated, the charity can claim an additional 25p, making the total value of the donation £1.25.
- The charity uses the additional funds to support their work, and the donor receives a reduction in their tax bill, as the tax reclaimed by the charity can be offset against their tax liability.
It’s important to note that Gift Aid only applies to donations made by UK taxpayers, and the charity must keep accurate records of the donations received and the Gift Aid claimed in order to meet the HMRC (His Majesty’s Revenue and Customs) requirements.
Read more about Gift Aid Declaration requirements.
Making a Bigger Impact with the UK’s Gift Aid Program
By allowing your donors to claim Gift Aid your organization can make the most of donations received by claiming back the basic rate tax and boosting the value of donations by 25%.
How the Gift Aid program can help charities make a bigger impact:
- £10 donation: Let’s say a donor gives £10 to a charity. The charity can claim an additional £2.50 (25% of £10) from the UK government under Gift Aid, making the total value of the donation £12.50.
- £100 donation: If a donor gives £100, the organization can claim an additional £25 (25% of £100) from the UK government under Gift Aid, making the total donation £125.
- Recurring Donations: A donor decides to give £10 on a monthly basis. If the donor gives for one year, the organization can claim an additional £30 (25% of £120), making the total received £150.
Many people utilize both the Gift Aid and Recurring Donations Add-on to increase the power of every donation.
Your organization should take this opportunity to clearly explain the value of the Gift Aid program to your supporters and its impact. Knowing that they’re able to make a significant additional impact on your organization may rustle up a feeling of empowerment for your donors. And it doesn’t hurt that donors also reap the benefits of Gift Aid.
The exact amount donors can be claim is depending on the donor’s individual tax circumstances and the amount of the donation.
Handling Donations from Around the World
If your organization is located in the UK, but you accept donations worldwide, you may want to direct your UK donors to a GiveWP form that allows for Gift Aid. Direct your donors from other countries elsewhere.
- Create a GiveWP form specifically for your UK donors (Donations > All Forms > Add New).
- Give your form a name, select your preferred template, write your form description, include a quality featured image, and customize your donation and display options.
- Navigate to the “Gift Aid” menu on the left-hand side and click “Customize”. This will enable Gift Aid on this form specifically.
- Customize your Gift Aid settings such as your Gift Aid explanation and long description, agreement, and the declaration form.
- Create a new WordPress page where you’ll direct your UK donors and add your GiveWP form where Gift Aid is customized to that page via shortcode or block.
- Decide how you’ll direct your donors to your UK landing page. The simplest approach is to have two “donate” buttons in your menu and home page, a button for US donors and another for UK donors, for example, depending on your donor base.
Gift Aid can be a very important revenue stream for UK-based charities. However, the Charities Aid Foundation found that about 23% of donors don’t take advantage of Gift Aid leading to nearly £500M in unclaimed aid every year.
Your organization can make it simple for your donors to opt-in to Gift Aid with GiveWP while simultaneously educating them on the benefits of #TickingTheBox. It’s also helpful to note that the Charity Finance Group leads the charge on Gift Aid Awareness Day, held annually on October 6th. For organizations using Gift Aid on their donation forms, this is a great way to introduce and encourage your supporters to
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