It is a declaration in which you authorise a charity to claim back the income tax and/or capital gains tax you have paid to the government. If you are a taxpayer, then you have paid tax on your income. The donation you give to a charity is from your income, so it has had tax paid on it. This declaration authorises the charity to claim back from the government the tax paid on your donation.

You are eligible to authorise a charity to reclaim the tax on your donations if:

You are an individual UK taxpayer.
The amount of tax that the charity will reclaim does not exceed the amount of tax you have paid in that tax   
   year.

The charity to whom you give your donation. You must authorise them by signing the Gift Aid Donation form at the bottom of the standing order.

Inland Revenue - from the tax that you paid them.

Inland Revenue will give the charity 28p for every £1 that you give as donation. Thus, the charity will get £12.80 if you donate £10 to them. This is 28% of your donation.

If you pay tax at the Higher Rate, Inland Revenue will give back 40p for every £1 that you give as donation; the charity can claim 28p and you can claim the remaining 12p for yourself.

You can cancel your declaration at any time by notifying “Ibad Ar-Rahman”- it will then not apply to donations you make on or after the date of cancellation or such later date as you specify.