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.
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)
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.
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.
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.
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.
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
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!
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’.
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.
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
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
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
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
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
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
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
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
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
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