UK

Gift Aid

If you are a UK tax payer, Gift Aid is an easy way for Exeter maximise the value of your gift. Under this scheme, the College can reclaim tax from HMRC on the 'gross' equivalent of your donation (i.e. on the value of your donation before tax was deducted at the basic rate). Since 6 April 2008 this was set at 20% of the gross amount donated

Donors can work out the amount of tax that the College can reclaim on their gift by dividing the net amount donated (after tax) by four. This means that for every £1 donated, the College can claim an extra 25p.

Example: for every £125 a (basic rate) donor earns, he/she is taxed at 20% and takes home only £100. The College can claim the 20% (£25) tax back at no cost to the donor (see note below about transitional tax relief). Therefore, if a donor, whose earnings are taxed at 20%, makes a donation of £100 and Gift Aid is claimed, the College receives £125.

High Rate Tax Payers

If you are a higher rate taxpayer, you too can benefit from tax relief as you can claim back the difference between the higher rate of tax at 40% and the basic rate of tax at 20% on the total value of the donation - a total of 20 per cent of the gross amount of your gift.

Example: if £100 is donated, the gross donation would be £125, so Exeter can claim back £25 (as above under Gift Aid at the Basic Rate) and the donor could claim £25 back too (also, 20% of £125 as £50 would have been paid in tax i.e. 40% of £125).

Please note: As of 6th April 2010, if your annual income is greater than £150,000, a higher marginal tax at 50% will be applied to your income. It is not yet clear whether or not the government will cap the amount of tax rebate allowable (i.e. keeping it the same as for 40% tax payers), but assuming they do not then the tax benefits to the donor will be even greater and a gift of £1,000 will only cost the donor £500 net (having made a gift of £800, the College claims the same £200 as for all charitable donations and the donor claims a rebate of £300). As soon as a clear decision is provided by HMRC this page will be updated.

Eligibility

Donors must pay at least as much UK tax (Income Tax and/or Capital Gains Tax) as the amount of Income Tax that both the College is reclaiming. If a donor makes a number of Gift Aid donations (to one or more charities), he or she must pay a sufficient amount of UK tax on the total amount of those donations and they may be required to pay any shortfall in tax paid to HMRC.

Examples

John is a higher rate taxpayer and donates £100 to charity. As he pays regular Income Tax on his earnings, the basic rate of tax on his donation has already been covered by his tax payments and the charity claims back the basic rate tax of 20 per cent from HMRC. So the charity is able to make a repayment claim of £25 (£100/4).

As a higher rate taxpayer, John can claim the difference between the higher rate of tax at 40 per cent and the basic rate of tax at 20 per cent on the total value of his donation, so he can claim 20 per cent of £125, a total of £25.

Donations that qualify for Gift Aid

Gift Aid can only be claimed on gifts of money from individuals, sole traders or partnerships, in any of the following forms:

  • cash
  • cheque
  • Direct Debit
  • credit or debit card
  • postal order
  • standing order or telegraphic transfer

Gifts made by cheque only count as received once the cheque has cleared.

Exeter can accept gifts of money made in sterling or any foreign currency.

Transitional Tax Relief

Following the change in the basic tax rate from 22% to 20% in April 2008, the College can claim "transitional tax relief" from HMRC on donations made from 6th April 2008 to 5th April 2011. HMRC will automatically pay the College a further 3p for every £1 donated under the Gift Aid scheme. This means that for every £1 donated, Exeter received an extra 28p (25p + 3p).

At Exeter, for all gifts under £10k this additional 3p is added to the Annual Fund. For gifts over £10k this additional 3p is added to the value of the specific donation and directed towards the specific project to which the gift was given.

Further details on Gift Aid can be found on the HM Revenue & Customs website.