Tax law when giving to charity through Gift Aid

Gift Aid increases the value of donations to UK charities and Community Amateur Sports Clubs (CASCs) by allowing them to reclaim basic rate tax on your gift. If you pay higher rate tax you can claim extra relief on your donations. If you claim age-related allowances or tax credits, Gift Aid donations can sometimes increase your entitlement.

You can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you've paid in the tax year in which your donation is made (6 April one year to 5 April the next) is at least equal to the amount of basic rate tax the charity or CASC is reclaiming on your gift.

If you make a number of donations you will need to consider the tax you've paid on each donation on an accumulative basis.

If you don't pay enough tax you may be required to pay any shortfall in tax to HMRC.

You don't necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you've paid could include:

• tax deducted at source from savings interest
• tax on State Pension and/or other pensions
• tax on investment or rental income
• Capital Gains Tax on gains

But only UK tax counts, so if you only pay tax outside the UK you won't be able to use Gift Aid.

How to check if you've paid enough tax

To work out if you've paid enough tax to cover your donations, divide the donation value by four. For example, if you give £100 in a particular tax year you will need to have paid £25 tax over that period (£100/4 = £25). (Note that this calculation is based on the basic rate tax of 20 per cent.)

If you don't think you've paid enough tax this year, you may be able to backdate your donation.

If you make a Gift Aid donation(s) and have not paid enough tax you may have to pay the shortfall to HMRC.