INFORMATION SHEET

GIFT AID Rotary GB&I Finance Committee Issue date: February 2018 Updated: June 2020 Review date: June 2021

What is Gift Aid? Payments NOT qualifying for Gift Aid Gift Aid is a scheme operated by HM Revenue and Customs • donations of money from a company (HMRC) which enables a charity to increase the value of its • donations in the form of a loan or loan waiver monetary gifts from donors who are UK taxpayers. • gifts made on behalf of other people The tax recovered by the charity is on the ‘gross equivalent’ • gifts that come with a condition about repayment of the donation received i.e. its value before UK tax was • gifts with a condition that the charity buys goods, deducted at the basic rate. services or property from the donor • payments received in return for goods or services - Gift Aid can cover single donations of any amount or can these are not gifts e.g. payment for admission to a apply to a series of gifts without time limit. concert, payment for a raffle ticket, an entrance fee for a sponsored challenge event, etc. Claiming tax on Gift Aid donations • a 'minimum donation' where there is no choice about A charity must be recognised by HMRC as a charity for tax payment - this is simply a fee for goods or services, it is purposes before HMRC will accept a Gift Aid claim. not a gift Recognition by HMRC as a charity is a separate process • gifts made using 'charity vouchers' or 'charity cheques' from registering with the Charity Commission relevant for • donations received before the date that HMRC accepts your jurisdiction. your organisation as a charity for tax purposes. Before your charity can make a Gift Aid claim, you need to Please note amounts received from members in respect nominate someone in your charity as an authorised official of subscriptions (for funding administration and or nominee to act on its behalf in Gift Aid claim matters. capitations) and/or meal costs cannot be given under Gift Who can make Gift Aid donations? Aid as they are not for charitable purposes and cannot be classified as voluntary donations. In order to make a qualifying Gift Aid donation, donors must pay at least as much UK Income or UK Capital Gains Gift Aid declarations Tax as the amount of Income Tax that the charity is Before your charity can claim tax back on a donation made reclaiming. by an individual, you need to obtain a Gift Aid declaration Tax relief for donors from that individual - the donor. Where the basic rate of tax is 20%, the individual donor A Gift Aid declaration can be made in writing, electronically must have paid income or capital gains tax of 25p for every or verbally, and must contain certain information about £1 donated to charity under Gift Aid. The effective gross the donor. donation is £1.25. Where a verbal declaration has been made you must send For higher or additional rate taxpayers, the donor is able to the donor a written confirmation of their declaration. This claim tax relief equal to the difference between the higher must contain certain information as specified by HMRC. rate of tax paid and the basic rate of tax of 20% on the total Verbal declarations are not effective until this written value of the donation. Details of donations made under confirmation has been sent to the donor. Gift Aid are reported on the donor's tax return and any There is no set design for a Gift Aid declaration. Charities additional tax relief due is given though the Self- can choose to use their own Gift Aid declaration form Assessment system. which must contain certain information. Alternatively, It is essential for donors to keep a record of all payments they can use a HMRC model Gift Aid declaration. There are made under Gift Aid to support claims for tax relief made three separate versions covering single donations, multiple in this way. donations and sponsorship events. There is a different Gift Aid declaration form for Retail Gift Aid (see later). Donations qualifying for Gift Aid You must keep these records in support of your Gift Aid Gift Aid is only available for gifts in the form of a monetary repayment claims. Each donation included in a claim must payment unless made under the Retail Gift Aid scheme. be supported by a Gift Aid declaration. The donation may be in sterling or a foreign currency, converted to sterling at the rate on the day the gift is made. All declarations must include the following information: There is no minimum donation on which Gift Aid may be • name of the charity claimed. • donor’s name (minimum first name initial and last name) and address (minimum house name/number and post code)

The information contained in this document is guidance only and should be read in conjunction with all other relevant material. • a description of the donations to which the There is a different procedure for declarations relating to declaration relates, and whether the declaration donations for sponsored events and challenges. covers only the present donation or past and/or Please refer to the HMRC website for more details on future donations as well (a tick box is sufficient) https://www.gov.uk/guidance/gift-aid-what-donations- • an explanation to the donor that they must pay at charities-and-cascs-can-claim-on#charity-auctions . least as much UK Income Tax and/or UK Capital Gains Tax as the amount that will be claimed by the charity Gift Aid claims for sponsored events and any other charities that they donate to and that If your claim includes amounts received for sponsored other taxes such as VAT and council tax do not qualify events for which there are a large number of donors, you • a statement or verbal confirmation by the donor that don’t need to include all the individual donor details. Gift Aid is to apply. A tick box is sufficient. • the date the declaration is made. Instead there is a sponsored indicator you can set on the online claim. Gift Aid declarations can be worded so that they apply to: When making a claim, you only need to provide full details • a single donation, or of the participant, the total sponsored Gift Aid amount and • a single donation plus specified past donations made the date of the event. Individual donations of £500 or in the previous four years plus all future donations. more must be listed separately on the claim. The donor is responsible for informing the charity of any You must only include in the claim donations that the changes to details provided on the Gift Aid declaration. sponsor has indicated to include in Gift Aid. You must retain all original sponsor forms. Further details can be found on the HMRC website: https://www.gov.uk/guidance/gift-aid-declarations- Selling donated goods on behalf of individuals (Retail Gift claiming-tax-back-on-donations. Aid) ‘Benefits’ given in return for donations This process is exclusive to charity shops that operate a retail Gift Aid scheme to sell goods on behalf of donors. To A charity can give donors modest (low value) tokens of maximise the amount raised, charities can sell valuable or appreciation - called 'benefits' - to acknowledge a collectable items donated to a shop. This can be at a donation, but there are limits on their value. The key commercial public auction or an online auction website. principle to remember is that if any donor or person connected to the donor, benefits significantly from their Money raised by selling donated goods like clothes does donation, then their donations will not qualify for Gift Aid. not qualify for Gift Aid. You need to explain to owners of The benefit limits for donations to one charity in any one donated items that the shop, auction or website will act as tax year are as follows: their ‘agent’ to sell goods on their behalf if the owner will give the sale proceeds (minus any commission charged) to Amount of donation Maximum value of benefits the charity as a Gift Aid donation. £0 - £100 25% of the donation If you operate a charity shop, staff and volunteers must explain the arrangements before donors complete a form £101+ 25% of £100 plus 5% of £101 appointing you as their agent. up to the total benefit value of £2,500 The owner has the right to keep all the proceeds from the sale of their goods. They can choose to donate all or part These rules still apply when a family member or a of the amount. You can claim Gift Aid on the agreed company run by the donor receives the benefit. amount after any commission (including VAT) has been The benefit limits listed above are for Gift Aid purposes deducted. only. If you, as a VAT registered business, give a donor a The owners of donated goods will usually make a Gift Aid benefit in return for a payment this may be considered a declaration when they ‘sign up’ for the scheme before you business supply for VAT purposes and VAT may be due on sell their goods. income. Payments for the following usually cannot come within the There are three methods of operating Retail Gift Aid and Gift Aid scheme: further details can be found on the HMRC web site at • to purchase books, jumble sale items, food, etc, https://www.gov.uk/guidance/gift-aid-what-donations- • for admission to events (jumble sales, concerts etc) charities-and-cascs-can-claim-on for more details. • for raffle or lottery tickets (including 100 clubs etc). Gift Aid Small Donations Scheme (GASDS) Gift Aid - rules in specific situations GASDS applies to cash or contactless card donations of £30 In certain circumstances, some payments made to charities (£20 prior to 5 April 2019) or less anywhere in the UK. This which are not strictly gifts, e.g. successful bids at a charity means that charities are able to apply for a Gift Aid style auction or tickets for events, may be treated as donations repayment without the need to obtain Gift Aid for Gift Aid purposes as long as the Gift Aid rules are declarations for those individual donations. The charity followed. needs to take reasonable steps to apply the £30 limit such

The information contained in this document is guidance only and should be read in conjunction with all other relevant material. as giving instructions to collectors to record any individual nominated account. Claims made using form ChR1 can donations greater than £30 separately. take up five weeks to be paid. There may be a longer delay on the first claim made. The total annual donations qualifying under GASDS is capped at £8,000 per year per charity which means a Please refer to the HMRC website for details: maximum repayment of £2,000 per annum. https://www.gov.uk/claim-gift-aid/how-to-claim

The previous requirments about a record of previous Gift Retention of Gift Aid records Aid claims have been lifted. Charities still need to have a Gift Aid declarations can be kept on paper or electronically. good tax compliance record with no penalites levied by If records are kept in electronic format, there should be a HMRC for Gift Aid issues in the previous two years. process to ensure that regular backups of the data are No benefits can be given to donors under this scheme. taken and stored separately. You must not include any donors who have already made Charitable trusts and companies are recommended to a Gift Aid declaration. keep their tax records (including Gift Aid declarations and records) until the later of: There is a Matching Rule for GASDS under which charities • six years after the end of the tax year they relate to, must match claims under the scheme with those under Gift for charitable trusts, Aid in the same year. For every £1 of ordinary Gift Aid • charities can claim GASDS top up payments of £10 up to or six years after the end of the accounting period to which the claims relate; and the maximum limit of £2,000. • 12 months after you make your Gift Aid repayment For further information on the GASDS please visit the claim for that tax or accounting year. HMRC website: Where Gift Aid declarations are enduring, i.e. apply to all https://www.gov.uk/government/publications/charities- future donations made by that individual, the Gift Aid detailed-guidance-notes/chapter-8-the-gift-aid-small- declaration should be kept for six years from the last donations-scheme. donation made under that declaration.

How to make a Gift Aid Claim Donations to Rotary Foundation of the United Kingdom There are three ways for charities to claim tax repayments: (RFUK) • Claims on-line using the Charities Online Service Donations from individuals and club members to RFUK You can use an online form to file your repayment should be made direct to the RFUK. They provide Gift Aid claim. You will need to add information about the declaration forms and deal with reclaiming Gift Aid. Where donations your charity receives onto a schedule donations intended for RFUK have been collected in bulk spreadsheet and attach it to your online claim form. To by the club, the funds and Gift Aid declarations should be use the online claim form your organisation needs to sent direct to the RFUK administrator at the Rotary Support sign up to use HMRC online services Centre together with a list of the names of the individual https://www.gov.uk/guidance/claim-tax-back-on- donors and the amount each one has donated. Gift Aid donations-using-charities-online. claimed on donations to RFUK is credited to the same account as the original donation. • Claims online using third party software For claims of over 1,000 donations, you must use Further help software to make the claim. For further help, please contact either your District • Claim manually by using a paper claim form ChR1 Treasurer, the Rotary GB&I Finance Department, or visit Form ChR1 can be ordered from HMRC charities the charities section of the HMRC website: helpline. You must use an original form for each claim. https://www.gov.uk/charities-and-tax. When and how often to claim A charity can claim tax as often as it likes, but there are time limits: For a charitable trust - claims must be made no later than four years after the end of the tax year to which the claim relates e.g. for donations made during the year ended 5 April 2017, the final date on which a Gift Aid repayment claim can be made to HMRC is 5 April 2021. For all other charities - claims for charitable companies must be made no later than four years after the end of the accounting period to which the claim relates.

When you will receive your money Claims made online are paid within four weeks although in practice they are usually much quicker. You will receive a postal notification that the claim has been remitted to your

The information contained in this document is guidance only and should be read in conjunction with all other relevant material.