Gift Aid

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You'll no doubt have met plenty of people shaking charity boxes at you over Christmas. But while putting in the odd bit of loose change may be the easiest way to give, it's also the least tax-efficient.
 
The reason is that such donations can't be made through the Gift Aid scheme, which uses tax relief to boost the value of your donation. Gift Aid was introduced in 1990 and in the financial year 2014/15, UK charities got £1.19bn from the scheme.
 
Under Gift Aid, if a basic rate taxpayer gives £1 then the charity gets £1.25. It doesn't cost you anything - the charity simply reclaims the basic tax from the taxman.
 
There's a boost for higher rate taxpayers, who can claim extra relief when they fill in their tax return or through their PAYE code if they are employed or have recently incorporated. The bonus is 20% of the total amount the charity receives (i.e. £1.25), so they would get back 25p of every £1.
 
Giving under Gift Aid is often simply a matter of ticking a box declaring you are a UK taxpayer. You need to be liable to pay at least the amount of tax that the charity is reclaiming. There is no minimum and once you've made a Gift Aid declaration to a charity, then you don't need to make it each time you make a new donation. Many UK charities including Dentaid use a partner like Justgiving.com to help claim GiftAid and take payment. With services like Justgiving you can set up an account which helps you claim the additional higher rate tax relief by keeping an accurate record of your donations. All you need to do is simply print out a copy of your donations history and attach it to your tax return.