The government Gift Aid scheme means that a donation to charity can be increased by 25% so that the charity is effectively getting tax relief on the donation.
So if you give £10 to charity and claim gift aid then the charity will get £12.50. Gift aid only applies at basic rate tax and not at higher rate (see below for more on this).
But if you are wondering can I claim Gift Aid on charity donations? then the answer is, only if you are actually paying some tax. So, if your earnings come below the personal allowance and you are not paying any other tax like Capital Gains Tax, then you cannot claim the Gift Aid on your donations to charity.
So this means that each year when the personal allowance increases, there will be more people that will be in the situation where they are not paying tax and therefore cannot claim Gift Aid.
However, as long as you are paying some tax, then you can claim Gift Aid on donations up to 4 x the amount of tax that you have paid in that tax year.
You will need to notify the charity that you are eligible to claim Gift Aid and if you do this when you are not actually eligible then you will be liable to pay back that tax.
If you pay higher rate tax then you can reclaim the difference between the higher and lower rate though your tax return.