Gift Aid

PCCs are charities. Income tax which has been paid on donations to churches can be recovered from HMRC. The process for recovering this money is called Gift Aid.

How does it work?

Gift Aid is surprisingly easy to use. Gift Aid can apply to donations of any amount, large or small, by cash, cheque, postal order, direct debit, standing order, debit or credit card or even in a foreign currency (including the Euro).

If you are a UK taxpayer, all you have to do is give the Church a simple Gift Aid declaration. This might involve completing a short form or just giving basic details to the Church over the phone or the Internet.

What's more, one single Gift Aid declaration can apply to all past donations you have made over the past 4 years and to all future donations you make.

If you are a higher rate taxpayer looking to reclaim tax from your donation, all you have to do is remember to include details of your charitable gifts on your tax form.

Donors who are liable to tax at the basic rate

If a donor wishes to make a regular net contribution to the Church of £100, the Church can recover tax at the basic rate (20%) from HMRC. The gift is then worth £125.

Donors who are liable to tax at the higher rate

Donors who are liable to tax at the higher rate (40%) will have paid £67.00 in tax. The Church can re-cover tax only at the basic rate but a higher rate relief can be claimed back by the donor - by entering the details on their Self Assessment tax return. A net gift of £100 to the Church then only costs the donor £75.00. The Church will hope that this reclaimed tax will be used to increase the donation at no extra cost.

Do you qualify?

Providing you pay enough tax (income and/or capital gains) to cover the amount the church reclaims in the same financial year, you are entitled to use Gift Aid. For example, if you wish to Gift Aid your charitable donations that total £100 in one year, you will need to have paid at least £25 in to the taxman in respect of that tax year.

Payroll Giving

Payroll Giving is a flexible scheme that enables you to make donations to the Church (or any charity) straight from your gross salary (before tax has been deducted). This means that you get immediate tax relief on the value of your donation. Therefore, for a basic rate taxpayer wanting to give a £10 donation, it will only cost £8, or just £6 for higher rate taxpayers.

How does it work?

Very easily. Your payments are deducted straight from your salary either as a regular monthly payment or as a one-off gift. All you need to do is choose how much you want to give and to which charity or charities, tell your payroll department and they will do the rest.