Gift Aid - How Does This Work?

[Lola1]

I have just donated to this charity for the elderly and disabled affected by the flooding. DOes anyone know how the Gift Aid work?

https://www.justgiving.com/empowered-communities

thank you

[andy-hughes]

If you Gift Aid your donation, the charity are able to reclaim the tax that would be levied on the amount from the Exchequer, so they keep more of the money you have given.

[hc4361]

The charity is able to reclaim the tax you have paid on your donation, effectively giving the charity 20% more.

[Gizmonster]

For a charity to claim Gift Aid on your donation, you must first have paid Income Tax or Capital Gains Tax that financial year.
Charities don’t pay tax on most types of income, which is why the tax paid on financial gifts to charity can be claimed back.

[Buenchico]

>>> The charity is able to reclaim the tax you have paid on your donation, effectively giving the charity 20% more

Faulty maths, Hc4361! It works out at 25% more.

Donations to charity aren't subject to income tax. If you earn £100, the Treasury takes £20 of it in tax (assuming, of course, that your annual income is above the current Personal Allowance and that we're not complicating matters with higher rates of tax here). If you give the remaining £80 to charity, that charity is entitled to say 'this money shouldn't have been taxed' and to reclaim the £20, giving them a total of £100 (instead of £80), which is 25% more.