Charities are missing out on hundreds of millions of pounds of Gift Aid because almost a quarter of eligible donors say they do not use the tax break when they give to charity, new research has found.
A survey of almost 800 people, conducted by the pollsters YouGov between October and December for the Charities Aid Foundation, found that 23 per cent of the respondents who had made a donation in the previous year that would have been eligible for Gift Aid did not use the incentive.
It found that 68 per cent of eligible respondents had claimed Gift Aid on their donations, while the remainder could not remember.
CAF said that although the number of donors using Gift Aid had steadily risen over time, it was still underused by many full-time employees who paid income tax.
The organisation said Gift Aid was worth £1.3bn a year to the charity sector, but the Charity Finance Group estimated that more than £500m goes unclaimed each year.
Mark Greer, managing director of philanthropy services at CAF, said Gift Aid could be difficult for donors to understand, so charities should make sure the ability to claim the tax break on a donation is clearly displayed and explained in a simple way.
“Before a charity can reclaim tax on a donation, individuals need to make a Gift Aid declaration, either verbally or in writing,” he said.
“The HM Revenue & Customs website has information on what the declaration should include, and also provides template forms for charities to use.
“Managing Gift Aid can be an admin burden for charities, but there are systems that can manage the process.”