Although Gift Aid is not a form of fundraising it is a great way to make extra money at no extra cost to your supporters. You can claim back 25p every time an individual donates £1 to your charity or community amateur sports club (CASC).
The basics of Gift Aid are:
- Charities can claim back 25% for every donation. A donation of £100 by a donor is worth £125 to the charity. This is free money for charities so, make the most of it and encourage your supporters to sign up.
- To be eligible to claim Gift Aid, the donor must pay as much UK tax (income tax and capital gains tax, not any other type of tax) as the amount that the charity reclaims.
- The donor must confirm that they wish the charity to reclaim tax on their donation. They do this by providing the charity with a Gift Aid declaration. HMRC provides example declarations for you to use. There is no set design for declarations but there is a minimum amount of information that must be included.
- As a charity you must retain Gift Aid declarations from each donor covering the donations on which they are claiming back Gift Aid. Keep them safe and keep them for seven years after the last donation was received.
- Certain donations will not qualify for Gift Aid – for details of exemptions, check the Government website on claiming gift aid.
- There are special rules governing Gift Aid – for details on areas where special rules apply, check Government website on claiming gift aid.
- For charities to reclaim tax, they need to be ‘recognised’ by HMRC. This is easy to do and HMRC walk you through the process.
- Gift Aid claims are made by charities online via the Government’s tax gateway. Certain details are required for a valid claim, but HMRC provides a template spreadsheet that can be completed and submitted with a claim.
- There are time limits in which to make a claim – generally four years after the end of the financial year in which the donation was received – so don’t miss them.
- The charity must be able to demonstrate and ‘audit trail’ linking the donor with the donation.
- Charities should keep good records as HMRC are perfectly within their rights to arrive for a Gift Aid audit. Make sure you keep the Gift Aid declaration forms, your Gift Aid envelopes if you use those for Cash donations and keep up-to-date records of donations received and claims made.
If you would like further information about Gift Aid and how you can set yourself up, please book a 1-2-1 advice session.