The Christmas season is in full swing and many charities will have started work on their Christmas appeals. But how to you make sure that your charity is making the most of its Christmas appeal income? The short answer is Gift Aid!
How Will Gift Aid Benefit My Charity?
When your charity successfully submits a Gift Aid repayment claim to HM Revenue & Customs (HMRC), the charity can receive 25p per £1 of eligible donations i.e. for donations amounting to £100, your charity could receive £25 from HMRC. So, it is worthwhile considering submitting Gift Aid claims where possible in order to boost your charity’s income!
That Sounds Great: How Do I Claim Gift Aid?
Before you can start claiming Gift Aid your charity must be recognised as a charity by HMRC for tax purposes: it is not enough to merely be registered as a charity with the Charity Commission or OSCR. Once you have been granted charitable status for tax purposes from HMRC, you can register for a Government Gateway account and start to make Gift Aid repayment claims online.
What Donations Can I Claim Gift Aid On?
Any Gift Aid repayment claim must be based on valid donations. These are “donations of a sum of money” by individuals only who have paid or will pay UK tax. This includes contactless donations which are banked in the UK. The following conditions must also be met for donations to be eligible for Gift Aid:
- There are no conditions for repayment of the donation;
- The donation is not made via Payroll Giving;
- The donor will not get a deduction from their income for the donation;
- The donation is not part of an arrangement for the charity to purchase property; and
- The benefits (if any) received by the donor do not exceed the statutory limits.
Furthermore, the charity must also have:
- A valid Gift Aid declaration made by the donor which covers the donation;
- Evidence that they’ve explained to the donor the personal tax implications of making a Gift Aid donation (this can be on the declaration); and
- An audit trail linking the donation to the donor and their declaration.
What If I Don’t Have A Gift Aid Declaration?
Don’t panic! You still might be able to claim Gift Aid through the Gift Aid Small Donations Scheme (GASDS). As with Gift Aid, GASDS repayment claims must be based on valid donations. These are cash and contactless donations of up to £30 collected and banked in the UK. Charities cannot claim under GASDS on donations received by companies or where they hold a valid Gift Aid declaration for the donation. The following conditions must also be met for donations to be eligible for GASDS:
- The charity has been in existence for at least two complete tax years before the year in which the claim is made;
- Successful Gift Aid claims have been made in two of the previous four tax years, with no more than a year between the two years in which a claim was made;
- There have been no penalty charges on Gift Aid or GASDS claims for the year in which the claim is made or the previous year; and
- The charity has made successful Gift Aid claims on donations received in the same tax year amounting to at least 10% on the amount of small donations included in GASDS claims.
- Any top up payments under the GASDS are subject to a maximum small donation limit of £8,000 per tax year.
A Word Of Warning
Special rules apply when claiming Gift Aid on donations where your charity gives donors an item or service in return for the donation. Special rules also apply to community buildings under the GASDS.
How Can We Help?
Our experts can assist with anything from preparing and submitting Gift Aid and GASDS repayment claims to giving advice on Gift Aid and GASDS in general and for specific donations. Please contact us on firstname.lastname@example.org.