iMIS Gift Aid allows UK charities to reclaim tax on Gift Aid donations. This adds significant value to a gift at no cost to the donor.
How Gift Aid works
Paul earned £1000 last month. Assuming he pays regular income tax on his earnings at the basic rate of 20%, £200 in tax was deducted from his pay, or £25 in tax for every £100 in pay.
Paul then makes a donation of £100 to your charity. If Paul completes a Gift Aid declaration, you can reclaim the £25 he paid in tax on this £100 donation. Thus, your charity receives £125 (£100 donation + £25 tax reclaim) at no extra cost to Paul.
Changes to Gift Aid beginning April 6th, 2008
Since April 6th, 2000, charities have been able to claim Gift Aid relief at the basic rate of income tax (22%) if the individual donor consented and the donation was eligible for tax relief.
On April 6th, 2008, the basic rate of income tax changed to 20%, reducing the amount of Gift Aid relief available to charities. However, the government instituted a period of transitional tax relief that will last from April 2008 to April 2011. During this time, charities can claim 20% Gift Aid relief on donations and the HMRC will make up the remaining 2%.
Charities do not need to make a special claim for transitional relief. HMRC pays it automatically along with your Gift Aid tax repayment.
For more information about Gift Aid, visit the HMRC Gift Aid site.