Gift aid

Gift aid is tax relief on money donated to UK charities. HMRC treats donations as if the donor has already deducted basic rate tax from them. The charity can then reclaim this tax to increase the value of a donation.
For instance, if a donor gift aids their donation, the charity will receive an additional 28p for every pound the donor gives. The charity can claim gift aid of 25p on every pound and from 6 April 2008 until 5 April 2011 HMRC is also operating transitional provisions for gift aid donations made, paying a government supplement of 3p on every gift aided pound.
Gift Aid was originally introduced in the Finance Act 1990, but was originally limited to cash gifts of £600 or more. The policy was substantially revised in 6 April 2000, when the minimum donation limit was removed. A similar policy applies to charitable donations by companies that are subject to UK corporation tax.
Gift Aid was originally intended for cash donations only. Since 2006 however, HMRC has allowed tax on the income earned by charity shops acting as agent for the donor to be reclaimed, although to operate effectively, the charity needs HMRC-approved systems to be able to record and track the progress of each item from receipt to sale, and confirm with the donor that the donation should still go ahead.
Charity campaigners are calling for an opt-out form of gift aid rather than the current opt-in.