What is Gift Aid?
Originally introduced by the government in 1990, Gift Aid is a scheme available to Charities and Community Amateur Sports Clubs (CASC), that allows you to claim extra money from HMRC. At the moment, this means that for every £1 donated you will receive an extra 25p. However, this depends on the donation being paid from the donor’s funds and that they have paid the basic tax rate for that year. They must also have paid enough income tax or capital gains tax to HMRC in that tax year, at least equal to the amount that your charity will reclaim. Meeting this criterion, they will also need to tick the Gift Aid box when donating, otherwise, your charity will miss out – so be sure to tell would-be donors about this!
How to Register for Gift Aid
As a registered Charity you will be eligible to register for Gift Aid. This can be done via the Charities Online section on the HMRC website. You must log in to your HMRC Online Services account using your user ID and password. If you don’t have this, you must register and sign up for HMRC Online Services. Make sure you have the following to hand before you begin this process since you will be asked for these details:
HMRC Charities Reference;
The last 4 Digits of your bank account or customer reference number;
Postcode of the charity’s registered address.
The Benefits and Rules of Gift Aid
Naturally, the main benefit of Gift Aid is to provide the charity with extra money. However, it also gives the donor the feel-good factor for being able to help out their chosen charity by increasing those funds a bit over what they can afford to give. There have also been previous studies where at least 40% of those donors asked have admitted that being able to add Gift Aid to their contribution has made them more likely to donate in the first place.
In some cases, if a donor pays tax at more than the basic rate, they can be entitled to tax relief, but they will need to claim that back from HMRC.
As far as rules go, the donations do need to be genuine and from the donor’s own pocket. For example, a fundraising event, such as a bake sale, would consist of many people buying cakes. Whatever the final profit, Gift Aid cannot be applied to this since it is a combination of funds, rather than out of one person’s pocket.
To receive a Gift Aided donation, you must receive a Gift Aid declaration from the donor. Gift Aid declarations can be in writing (ie email or text message), orally (in person or by phone) or online. Whether it be for one-off donations, multiple donations or for a sponsored event, these forms must include specific information, which includes:
Amount being gifted
Name of Charity
Full Name & Address of Donor
It’s also worth having a look at the following website: Swiftaid by Streeva. Swiftaid is making it easy for charities to get unclaimed Gift Aid and boost their income. By sending in donation information from the current tax year, Swiftaid can match with millions of UK taxpayers. For any matches found, 25% more is added – all without asking donors for additional funds.
In conclusion, it really is worth the time and effort to get your charity set up to receive gift aid. Without it, you’re losing out on a potential 25% increase in received funds from a large majority of those people donating to your cause.
