Money expert Martin Lewis has issued a warning to anyone who gives money to charity.
The financial guru has spoken out about a little known loophole regarding charity donations and how you can boost the money the charity receives – and knock a little bit off your own tax bill and get some money back as well.
Martin urged his followers to ‘say yes’ to something called Gift Aid.
This is a scheme whereby charities can boost your donation by claiming back the tax owed.
He said: “Say yes to GIft Aid. Because that way the charity gets more and you may get more too.
“Every year, charities miss out on hundreds of millions of pounds in unclaimed gift aid, which could do and it doesn’t cost you a penny.
“So the simple rule is when you donate if you’re a UK taxpayer, that’s crucial, just say yes indeedy to Gift Aid, it really is that simple.”
But it’s not just about helping charity – although obviously that’s the best part. You could also get some money out of Gift Aid too.
Martin continued: “But let me explain why and why you may be due some money in some circumstances.
“Now, the reason this works is because when most people are paid 20% tax is usually taken off.
“So, when you’re paid, tax office comes along and takes 20% of it away. So if you earn £25, you take home £20 of it (though that’s not factoring in National Insurance).
“But Gift Aid means when you donate that £20 to charity, the charity gets your money and the tax that you paid back, which works out as a gain of 25% on top, doesn’t cost you anything, but on each £20 it gets a fiver more.
“And there’s more, if you’re a higher 40% rate tax payer, therefore for every £100 you earn, you take home £60, the tax office gets £40. If you donate to charity, the charity still gets the 25% boost, the same as before, so the charity is getting more and you can claim the remainder of the tax that you paid back, which you can then donate to.
“You generally do this via the self-assessment form. So if you’re a UK taxpayer and you’re donating to charity, first of all for the charity say yes indeedy to gift aid but also for you, say yes indeedy for Gift Aid.
“And if you can, why not donate that little bit of extra tax you get back to charity as well.”
