A Guide to Gift Aid: The Basics

The current Gift Aid Scheme helps charities and Community Amateur Sports Clubs (CASC) save thousands each year in tax relief. A recognised charity or CASC can benefit from Gift Aid, which allows them to claim back up to 25p on every £1 donation received within the last four years. Although the Gift Aid Scheme will help many charities in the UK save, there are several things to remember in order to ensure that your charity is eligible. Raffingers Stuart has created a guide to help you understand the basics. Gift Aid is a tax efficient incentive that helps charities in the UK and EU save up to 25% extra each tax year; consequently, the Gift Aid Scheme is worth nearly £1 billion to eligible organisations each year. However, in order to qualify:

The Organisation:

• Must be a recognised CASC or a registered and recognised charity

The Contributor:

• Must not donate more than four times what they have paid in tax in that tax year.
• Must make a Gift Aid declaration (Charities can only claim on donations without a declaration if the donation is under £20). To find out more about Gift Aid Declaration forms, Click here.

However, not all charities and CASC’s qualify for the same treatment. When applying for Gift Aid, it is important to seek advice, as there are ‘special rules’, especially concerning:

• Funds from sponsored challenges
• Membership fees
• Collections from a church
• Goods sold on behalf of a charity
• Charity events and auctions
• Volunteer expenses donated back to the charity or CASC
• Funds that have been raised by charities who are involved in running schools

What you cannot claim Gift Aid on

Although most donations qualify, there are exceptions. The following donations do not qualify:

• From Limited Companies
• Are an exchange or payment for goods or services bought
• Are made through ‘Payroll Giving’
• Which come from shares
• Which are equivalent to a membership Fee
• That are loans
• That are from vouchers or charity cards
• Were made before you became a charity or CASC

Small Donations Scheme

If you have not received a Gift Aid Declaration, you can still claim up to 25% on cash donations of £20 or less. This is known as the Gift Aid Small Donations Scheme (GASDS) and charities and CASC’s can make a total claim of £1,250 per tax year. However, your claim can not be more than ten times your Gift Aid claim. In order to make a claim, you will need to keep details of the contribution, including the total donation, date the donation was made and the account the donation was paid into. This can then be claimed in the same way that Gift Aid is…

How to Claim Gift Aid

You can claim Gift Aid online. It is important you monitor and make a record of the claims you make. If you are making 1000 or more claims, you must use software. Depending on the set up of your company will depend on the financial period you will account for:

• The tax year if you are a trust
• Your accounting period if you are a CASC, Charity Incorporated Organisation or a Limited Company

All Gift Aid donations must be claimed within four years from the financial period you receive it in, and cash donations, under the Gift Aid Small Donations Scheme, must be redeemed within two years of the tax year that the donations were collected in. It is important to take individual advice in this area – if you wish to discuss your particular circumstances please contact Suda Ratnam at suda@raffingers-stuart.co.uk.