Ridley Hall, Cambridge

What is Gift Aid?

Gift Aid is a method of donating to charity designed by the Government to encourage individual giving. It’s simple to activate – just complete a donation form and enclose it with your donation.

What does it mean for you?

Basic rate taxpayers

If you are a basic rate taxpayer and sign a Gift Aid declaration with your gift, Ridley Hall can claim back the basic rate of tax on your gift, making it worth more than it actually costs you.

Example:

• On a gift of £100 we can claim £25* from the Government, making your gift worth £125.

*The figure is £25 not £20 as you might expect because the Government treats your gift as if you have already paid tax on it – Ridley claims back 20% tax on your deemed gift of £125 (the net figure of this being £100, which is what you have actually given).

Higher rate taxpayers

The benefit Ridley receives from higher rate taxpayers is identical to what it receives from basic rate taxpayers.

However, by entering the gift on their annual tax return form, higher rate taxpayers can claim the difference between basic rate tax and the higher rate tax they pay.

The March 2008 budget saw the lower rate tax rate fall, while the higher rate remained the same. The difference between the two has therefore increased, meaning that taxpayers are now able to claim more on GiftAided donations than in previous tax years. The only provision is that the donor must pay an amount of income tax or capital gains tax equal to or exceeding all gift aid declarations they make within the tax year in question.

Example:

• Ridley Hall can claim back £2500 on an initial Gift Aided donation of £10,000
• The higher rate taxpayer can claim back 20% of the deemed gift of £12,500 (see above)
• Therefore, a gift of £10,000 ultimately costs a higher rate taxpayer only £7500 and brings in £12,500 to Ridley Hall.