Gift Aid is an HMRC scheme that allows registered charities and Community Amateur Sports Club (CASC) to reclaim 25% income tax on donations from individual UK taxpayers. So if someone donates £100, the charity can actually receive £125.
Who can benefit from the Gift Aid scheme?
The Charity
All fully registered charities and Community Amateur Sports Clubs can benefit from the Gift Aid scheme.
The person who donates
If you are a higher rate tax payer you can claim an additional 20% tax relief on the total donated. This will normally be done by declaring it on your Self Assessment tax return by either you or your accountant.
You can read our claiming tax relief for Gift Aid donations to find out more about how to submit a claim to HMRC.
How do I make a gift aid claim?
The charity
You can submit an application online by using Charities Online. You will need a full record of all your donations and the relevant software. It is worth noting that if you are making a claim based on over 1,000 individual donations then you must use the software.
You can also phone the HMRC Charity number 0300 123 1073 to request Form ChR1, if you prefer to submit your claim by post.
The person who donates
If you are a higher rate tax payer you will need to claim the additional tax relief on your Self Assessment tax return.
Gift Aid regulations
In order for a charity or CASC to claim Gift Aid, the person donating must fulfill two requirements:
- Complete a Gift Aid declaration form.
This must include:
- the name of the CASC or charity,
- the donor’s first initial and surname (minimum)
- the donor’s house number and postcode (minimum),
- an acknowledgement that they have paid the requisite amount of Income or Capital Gains Tax
- a description of the donation itself.
Signing this form proves that the donor agrees to Gift Aid being claimed. The CASC or charity is required to keep these forms for at least 6 years from the date on which Gift Aid was last claimed.
- The amount the donor has paid in either Capital Gains Tax or Income Tax must equate to, or exceed, the amount being claimed as Gift Aid within that tax year.
Can you claim Gift Aid for all charitable donations?
Unfortunately not; Gift Aid cannot be claimed in the following circumstances:
- The donation was originally a loan that has since been written off
- Donations received from limited companies
- Donations of shares
- If Payroll Giving was used to make the donation
- The donation was originally received before you were officially registered as a CASC or charity.
- If donating leads to a ‘benefit’ for the donor once it exceeds a predetermined amount
- CASC membership fees
- CAF vouchers, or other charity vouchers or cards
- The CASC or charity provided goods or services and the donation is the payment
- Goods and services were purchased by the CASC or charity
Other types of donation have different, specific rules that govern their tax relief opportunities. For example:
- If volunteers donate their expenses back to the charity or CASC
- Collections in churches
- Membership fees to belong to a charity
- Sponsorship money raised through individual challenges (eg marathons)
- Charity auctions
- Money raised by charities that are involved with running schools
- Money raised through viewing property owned by the charity
- Charity events
Gift Aid Small Donations Scheme
This subsection of the Gift Aid scheme is to account for small cash donations of no more than £20.00 and where no Gift Aid declaration has been obtained.
This is a great opportunity for charities and CASCs to still benefit from the 25% tax reclaim, even without having a Gift Aid declaration. As of April 6th 2016, a maximum of £2,000 per tax year can be reclaimed. This is a substantial increase from the previous year’s amount of £1,250. A GASDS claim can be a maximum of ten times your GA claim. For example, if you received £100 of GA donations in one tax year, then you can claim £1,000 worth of GASDS donations.
What records do we need for GASDS claims?
CASCs and charities must have a record of the total cash donations, the date the collection was made and the date it was banked.
Can all charities and CASCs claim through the Gift Aid Small Donations Scheme?
There are three stipulations for CASCs and charities wishing to use the GASDS:
- You must have a clear tax record for the past 2 years – that means no penalties
- You must be claiming Gift Aid in the same time period as your GASDS claim.
- You must have claimed Gift Aid for at least 2 of the previous 4 years, without there being a two year gap in between claims.
What about collections taken in community buildings?
Community buildings, such as mosques, synagogues, temples and churches may be able to make a claim through the GASDS if there are a minimum of 10 people present at the time of the collection. This type of claim requires additional record keeping: the full address of the building, approximate attendance figures and the type of event.
What if my charity is connected to, or has merged with, another charity or CASC?
If you merge with another CASC or charity, then you may be able to use the other charity’s ‘good’ claims record. If two charities are connected then the new £8,000 limit is divided equally between the two. This was only £5,000 until 6th April 2016.
Are their time limits on making a Gift Aid claim?
Yes, and they are dependent upon how your CASC or charity is structured. You must make a Gift Aid claim within 4 years of the end of the financial period in which you received the donation. This decreases to within 2 years for Gift Aid Small Donations Scheme claims. For CASCs, limited companies and Charity Incorporated Organisations ‘financial period’ means from the end of your accounting period. For trusts, ‘financial period’ means from the end of the tax year.
All records must be kept for the following 2 years.
When can we expect the Gift Aid refund to be paid?
If you are receiving your Gift Aid claim by BACS, then it should take 4 weeks for online submissions and 5 weeks if you applied by post using a ChR1 form.
