Tax relief: Gift Aid is a way you can increase the value of a charitable donation – at no extra cost to you. If you pay tax in the UK, a charity can reclaim 25% of your donation from tax you have paid. You should be aware that if you have not paid enough tax to cover the Gift Aid portion of the donation, HMRC may recover unpaid tax from you – and some low earning taxpayers do get a shock when they have to repay the tax element to HMRC.
Example: If you donate £100 to a charity via Gift Aid, the total donation is worth £125 to the charity (the Gift Aid portion being £25). And, if you are a 40% taxpayer, you can also claim a tax refund of £25 for yourself – via your own Self Assessment Tax Return. But, if your taxable income is less than the Personal Allowance (£12,570 2022/23), then you will owe £25 to HMRC.