FAQs: Gift Aid

Gift Aid is a simple initiative which allows you to increase the amount raised from UK taxpayers on cash donations. Don't be put off by thinking it's time-consuming, it's definitely worth the effort!

What is Gift Aid?

Gift Aid is quite simply free money and a great way to boost your charitable organisation's income. The official terminology from HM Revenue & Customs (HMRC) is 'Gift Aid is a tax relief which allows a charity to reclaim from HMRC the basic rate of Income Tax a donor has paid on their donation (gift).' In layman's terms this means that those supporters who are current UK tax payers are eligible to Gift Aid their cash donations. This gives you an extra 25p for every £1 donated.

How does Gift Aid work?

When a UK taxpayer makes a monetary donation to your cause (that is an outright gift), they have already paid tax on that money. You can, through Gift Aid, reclaim the tax paid. By asking your supporters for permission to reclaim the tax they have already paid on their donation, you can increase the value of such donations by a whopping 25%!

Are there any specific rules?

Your charity of sports club needs to register with HMRC, and the donor cannot receive goods or services in return for their cash gift. Gift Aid could apply for:
Sponsored events: As long as the supporter receives nothing in return, then donations made through sponsored activities such as a fun run or sponsored bounce, run or Zumbathon etc. can be subject to Gift Aid.
Ticket entry to an event: Payments for such tickets CANNOT be Gift Aid-ed but a voluntary donation, on top of the minimum ticket price, can. For example, you may charge £8 for your curry and quiz night, with a £2 voluntary donation. You can claim Gift Aid on the £2 if your supporter is a UK taxpayer.  

Do we qualify?

You'll need to apply to HMRC for confirmation that your organisation is entitled to claim UK charity tax reliefs. This is a fairly straightforward process, and you don't have to be a registered charity, but you must be defined as a charity by law. Once approval has been given you will receive a reference number and confirmation of the date the entitlement to claim Gift Aid begins. If your organisation is based in England or Wales and currently has an income in excess of £5,000 per annum, then you will also need to register with the Charity Commission for England and Wales. Click here for more information on charity registration. If you are based in Scotland, you need to apply to the Office of the Scottish Charity Regulator (OSCR). Charities in Northern Ireland, should check with the Charity Commission for Northern Ireland.

How do we get started? 

Firstly you'll need to ask eligible supporters to confirm that they are UK taxpayers. The next step is to have them complete and sign a Gift Aid declaration form, which you should then keep on file. This form needs to include the donor's full name and address and the name of your organisation. Make this explicit to donors by explaining that you can't receive Gift Aid without this information. You only need to ask your supporters to complete one form as this provides cover for every gift made to the same charity, for whatever period they choose and can cover gifts they have already made and/or gifts they may make in the future. More information and a sample declaration form is available from hmrc.gov.uk.

How do I claim Gift Aid?

In April 2013 a new 'Charities Online' service came into effect. This allows charitable organisationst to register to make Gift Aid repayment claims online, reducing administrative burdens, saving postal costs and speeding up the process. Click here to learn how to sign up and use Charities Online.

What is the Gift Aid Small Donations Scheme?

The GASDS is designed as a top-up to Gift Aid for those donations where it is difficult to get a declaration from a donor, e.g. bucket collections passed around at a fundraising concert. Charities can claim a payment on donations of £20 or less, for up to £5,000 a year. Cash donations will need to be paid directly into the charity's bank account. You will need to be claiming Gift Aid already to make use of the GASDS and must have at least two years good claims history. A Gift Aid claim will need to be made in the year you make a GASDS claim. Complete the same forms as for Gift Aid, using the Charities Online claiming system - tell HMRC how much you are claiming and the year donations were collected. That's it - no need to provide donor information. For full terms, visit hmrc.gov.uk.

Resources

The HMRC website had detailed guidance notes on completing online Gift Aid claims. Click here to be directed to their Gift Aid Toolkit.

The above is intended as guidance only. Community Inspired Ltd cannot be held responsible for any decisions or actions taken by a fundraising organisation, based on the guidance provided. 

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