Gift aid


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Gift aid

  1. 1. Declaration All information is given by the Institute of Fundraising as current best practice, or is existing research which is credited. However, this is not a substitute for professional legal or financial advice.
  2. 2. Gift Aid in Numbers £1.07bn paid back to charities in 2011/12 £340 million to higher rate taxpayers in 2010/11 39% of donations from individuals used Gift Aid; 80% of those giving £100 or more used it Still an estimated £742 million left unclaimed each year(UK Giving 2012 CAF & NCVO; HMRC)
  3. 3. Gift Aid Facts On donations from UK taxpayers (income and capital gains tax) The 2010 budget extended Gift Aid to eligible EU, Norwegian and Icelandic charities The charity claims tax paid on donations Donors must complete a declaration – oral or written Both UK and non-UK Charities must be registered with HMRC for tax purposes to claim Gift Aid.
  4. 4. Gift Aid – What’s it worth? Gift Aid is currently worth an extra 25p per £1 donated It is calculated as a percentage of the gross donation - to take home £100, a basic rate taxpayer needs to earn £125.00 (at current 20% basic rate tax) The charity claims back the £25.00.
  5. 5. Gift Aid – TheValue of Gift Aid Donation Charity Total Donor Full potential claims donation reclaimsBasic rate £100 £25.00 £125.00 £125.00taxpayer(20%)Higher rate £100 £25.00 £125.00 £25.00 £156.25*taxpayer(40%)Highest rate £100 £25.00 £125.00 £37.50 £171.88*Taxpayer(50%)* Full potential with Gift Aid on the amount reclaimedby the donor and given to the charity.
  6. 6. Gift Aid –From 6 April 2013 Donation Charity Total Donor Full potential claims donation reclaimsBasic rate £100 £25.00 £125.00 £125.00taxpayer(20%)Higher rate £100 £25.00 £125.00 £25.00 £156.25*taxpayer(40%)Highest rate £100 £25.00 £125.00 £31.25 £164.06*Taxpayer(45%)* Full potential with Gift Aid on the amount reclaimedby the donor and given to the charity.
  7. 7. Gift Aid and HigherRate Tax Payers Higher rate taxpayers can reclaim the difference between their highest rate (40% or 50%) and basic rate tax (20%) on donations From April 2013 the higher tax rates will be 40% or 45%.This can be done on the taxpayer’s standard taxreturn (SA100) form
  8. 8. Gift Aid – Why? It’s free money! With a donor’s permission you can claim Gift Aid:  on their current donation  on donations made over the previous four years  and on all future donations Donors want charities to maximise the value of their gift!
  9. 9. Gift Aid – The Rules Donor must pay at least as much income tax or capital gains tax as the charity claims back in Gift Aid from HMRC Both UK and non-UK Charities must be registered with HMRC for tax purposes to claim Gift Aid Gift Aid can only be claimed on gifts of money Donor must complete a Gift Aid declaration Donor ‘thank you’ gifts cannot exceed HMRC’s ‘Donor Benefit Rules’.
  10. 10. Gift Aid –Donor Benefit Rules Donation < £100 – max benefit of 25% of the gift Donation £101 - £1,000 – max benefit of £25 Donation > £1,000 – max benefit of 5% of the gift Donation > £10,000 – max benefit of £2,500.
  11. 11. Gift Aid – ConnectedPersons Rule If a donor receives a benefit that exceeds HMRC’s ‘Benefit Rules’, then donations from the donor and individuals connected to that donor may not qualify for Gift Aid This is most common when the donor is taking part in a sponsored event where there are clear benefits such as flights and accommodation Connected people include any linear relative of the donor or their spouse/civil partner
  12. 12. Gift Aid –DeclarationDeclarations can be made in writing or orally and mustcontain: Donor’s first initial, surname, house number and full postcode Name of the charity Details of the gift(s) to which the declaration relates - can also specify if donor wishes to backdate and Gift Aid future donations Confirmation that the donor has paid UK income tax or capital gains tax sufficient to cover the amount that the charity claims
  13. 13. Gift Aid –Keeping Records Paper Electronic (hard drive, CD-ROM, disc etc) Scanned documents Oral declarations can be a recorded phone call or a follow-up letter confirming donor and donation details (and giving the donor a 30 day ’cooling off’ period) All records must be readily available for audit
  14. 14. Gift Aid – The AuditHMRC check to ensure that charities are following therules: Look at accounting records, systems and procedures Charity must produce a sample of donor records that include: records of donations, Gift Aid declarations and bank records The audit may also identify other tax risks – major donors, gifts of shares, gifts of land and property
  15. 15. Gift Aid – MakingClaimsFrom 22 April, claims can be made electronically throughCharities Online by: Using an online form: for up to 1,000 donors; submit online Through your own database: for 1,000+ donors; max 1 claim per day for up to 500,000 donors Using a paper form: new Claim Form ChR1 replaces existing R68; submit claim by post; claim for up to 90 donors by using ChR1CS Continuation Sheet
  16. 16. Gift Aid – Claims forSponsored Events All the donations for someone taking part in a sponsored event can be put as one entry under the name of that participant Single donations of £500 or more must be listed individually on the claim
  17. 17. Gift Aid – AggregatedClaimsCharities Online will allow claims for donations of up to£20 to be aggregated: Donations totaling up to £1,000 per entry can be added together, reducing the number of donations you have to provide details for You still need to keep records of each donation for audit purposes
  18. 18. Gift Aid – SmallDonations SchemeGASDS is a new scheme being introduced in April 2013: Charities can claim a top-up payment on cash donations of £20 or less without the need to collect Gift Aid declarations Charities will generally be able to claim on small donations of up to £5,000 per year. Claiming for £5,000 of small donations will result in a repayment of £1,250 for the charity
  19. 19. Gift Aid –Maximising Take Up Newsletter articles Specific or regular mailings Briefing staff and volunteers Envelope collections Sponsor forms Website; Online Giving; Blog; SMS; FaceBook;….. Use the gift Aid it logo
  20. 20. Gift Aid –Consider claiming on... Admissions to view charity property Charity Events Charity Auctions Adventure fundraising events Selling goods on behalf of individuals Church collections Gift Aid for school charities Voluntary workers expenses Membership subscriptions
  21. 21. Useful Websites Tel: 0845 302 0203