What is Gift Aid? A guide to legislation for charities

Published · 2 min read

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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