HMRC have recently disclosed that Gift Aid provides the charity sector with £1.3bn of funding.
They have also disclosed that the Treasury is willing to increase that support to almost £2bn.
In this age of austerity, after all there is no magic money tree, this willingness to meet an additional £600m of additional government expenditure seems to be unrealistic. Until you realise that the trigger to releasing this funding depends on us.
When we make donations, charities are obliged, in most cases, to obtain the donor’s signature on a Gift Aid declaration. This confirms that you will be paying sufficient tax to cover the 25p the government will pay to the charity for every £1 that you donate. The charity will then include your donation on their return to HMRC, and hey-presto, the appropriate tax refund will be made.
What the Gift Aid declaration does, is to empower HMRC to refund tax that you have paid, to the charity.
Apparently, up to a third of donations made are not accompanied by a Gift Aid declaration. Which raises the question set out in the title of this post: Why wouldn’t you?
Next time you are requested to complete a form, nod and take the proffered pen. This is probably the only occasion that you can determine how your tax is utilised. Make the most of the opportunity.
This issue was the subject of a recent article on our newsfeed for accountants. If you would like to find out more about the services Informanagement can offer UK accountancy professionals, please get in touch.