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GIFT AID Gift Aid is a way of giving that enables the 40:3 Trust to reclaim tax from the Inland Revenue. Currently, for every pound donated, the Trust can reclaim an additional 28 pence. Thus a donation of £1 is worth £1.28 to the Trust. For this to happen, you must be paying tax at least equivalent to the amount the Trust will claim. To put this way of giving into effect, all you have to do is to complete a simple "Gift Aid" declaration. If you have Adobe Acrobat, you can print off a PDF file by clicking on: Gift Aid Form. Alternatively, contact the office and we will send you a form. To allow the 40:3 Trust to benefit in this way is good stewardship and we would encourage all of our supporters to use Gift Aid when sending us donations. If you are a higher rate tax payer, you can reclaim from the Inland Revenue, an amount of tax corresponding to the difference between the standard and higher rates of tax. How it works for basic rate taxpayers In deciding what charities can reclaim from taxpayers who have made Gift Aid donations, the Inland Revenue calculates what is described as a "grossed up" amount based on the donation made. This is the sum which would give the actual donation after tax has been paid at the standard rate (currently 22%). Thus, suppose that you send a cheque for £1 to the 40:3 Trust. If you are a standard rate taxpayer, this is what would remain from a sum of £1.28 after tax had been paid at 22 pence in the pound. The "grossed up" amount is £1.28. So, every pound donated is worth £1.28 to the Trust. How it works for higher rate taxpayers Higher rate taxpayers can reclaim from the Inland Revenue a sum corresponding to the difference between the standard and higher rates of taxation applied to the "grossed up" donation. At the moment (2001/2002) the higher rate is 40% and the standard rate is 22%. The difference is 40-22=18%. A higher rate taxpayer can reclaim 18% of the grossed up amount. Thus if a higher rate taxpayer sends a cheque for £1 to the Trust, the grossed up amount is £1.28 and 18% of this is 23 p. This can be reclaimed when the annual tax return is made. Thus the actual cost to a higher rate tax payer of sending a donation of £1 to the Trust is 77 p. How to calculate what to give If a higher rate taxpayer wishes to give an amount that will eventually cost him or her £1, they should send £1.30 to the Trust. The grossed up amount is £1.66. The tax relief on this is 30p. Thus if £1.30 is donated, the taxpayer can reclaim 30p leaving the actual cost of the donation as £1. However, the Trust eventually receives £1.66. Thus at an ultimate cost of £1, the higher rate taxpayer allows the charity to realise the sum of £1.66. Making use of the tax laws in this way is a very effective way of giving for higher rate taxpayers. |