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What is Gift Aid? A guide to legislation for charities

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Gift Aid is a type of tax relief for donations to any registered charity or community amateur sports club (CASC).

It’s only available for monetary donations – donations of other assets and gifts in kind do not qualify. You can claim back 25p every time an individual donates £1.

What does a donor need to do?

An individual needs to sign a Gift Aid declaration that gives you permission to claim it.

This must include the individual’s name, address, date and the amount they are donating. The individual must also have paid as least as much in Income Tax or Capital Gains Tax in that tax year.

If a company is making a donation to a charity or CASC, it will deduct the donation from its taxable profits before calculating its tax liability. The donation is thus made gross of tax and the charity or CASC does not claim back any tax from HMRC. There is no need for the company to provide the charity or CASC with a Gift Aid declaration.

Do you always need individual donors to sign a Gift Aid declaration?

Not always.

You can claim Gift Aid on donations of £20 or less without the need for a signed declaration. This is called the Gift Aid small donations scheme (GASDS). Basically, this means that for every £1 donated, you can claim an extra 25p. You can claim up to £1,250 in a tax year. Find out more
about GASCS

Do you need to register with HMRC to claim tax back on Gift Aid donations?

You don’t have to register to claim Gift Aid but you will need to be recognised by HMRC as a Charity or CASC for tax purposes before it will accept a Gift Aid claim.

If you have a sports club that is not a registered charity, you will need to register it as a CASC with the HMRC CASC unit to be able to claim the tax back. It’s also worth noting that recognition by HMRC as a charity is a separate process from registering with the Charity Commission as a charity. Find out more about registering as a charity with HMRC

How do I submit information to HMRC?

Firstly, you will need to nominate someone in your organisation to be an authorised official.

This means that they can claim and receive money on behalf of your charity or CASC. The easiest way for them to submit information to HMRC and claim tax back is by registering with Charities Online – part of HMRC’s Online Services. Find out more about Charities Online

What types of donations qualify for Gift Aid?

You can only claim Gift Aid on gifts of money from individuals, sole traders or partnerships, in the following forms:

  • Cash
  • Cheque
  • Direct Debit
  • Credit or debit card
  • Postal order
  • Standing order or telegraphic
    transfer

A gift made by cheque only counts once the cheque has cleared. Monetary gifts can be accepted in sterling or any foreign currency.

What records do I need to keep?

You will need to keep details of:

  • All Gift Aid declarations
  • Any cancellations of Gift Aid
    declarations
  • Any benefits you provide to
    donors

Your records will need to be in the same format as when you received them, but they can be scanned and stored electronically. You will also need to be able to locate individual declarations on request for audit checks.

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