If you run a charity or donated to one, you may have heard of Gift Aid. But what precisely is it - and how can it be of help?
Essentially, Gift Aid is a scheme that enables you to claim extra money from HMRC. Whether you operate a charity or a Community Amateur Sports Club (CASC), it allows you to bolster your cash reserves with a direct contribution from the government. As long as you operate a registered charity, you can benefit from this extra funding boost.
Whenever someone donates to your charitable organisation (assuming they’ve paid any applicable tax on their gift and made the donation directly from their own funds), Gift Aid allows you to claim an additional 25% of their donation to put directly towards achieving your mission statement.
That’s a considerable amount of extra income, when you consider that 25p from every £1 donated will be added to your bottom line. For the donator, it costs nothing beyond their specified donation - but it can ultimately yield a sizable boost to your charitable assets.
In fact, tax reliefs for charities and their donors were a staggering £5.4 billion in 2022. Of this figure, a £1.34 billion chunk was exclusively through the Gift Aid scheme.
Each and every time that an eligible tax payer donates to your charity and ticks the ‘Gift Aid’ box, you’re gaining supplementary support to underpin your objectives.
Generally speaking, the amount claimed by charities has risen year-on-year, which means that figure seems set to climb even higher in the months to come.
There is even a smaller version of the scheme (called the Gift Aid small donations scheme or GASDS) which is specifically designed to offer you the same 25% bonus but on more diminutive donations, such as cash or contactless card contributions of £30 or less. To keep things simple, we’ll focus exclusively on the wider Gift Aid scheme, but you can find out more about claiming for smaller donations here.
You can secure your additional income by claiming Gift Aid online. Simply click here to get started.
Basically, all you’ll need is a Gift Aid declaration from the donor that specifies:
On the form, they’ll need to clearly state that they have paid an amount matching or exceeding the donation in Capital Gains Tax or Income Tax that year. This might sound onerous, but it’s as simple as having them tick a box and provide basic identifying details. You can view an example of a declaration form here.
Once you’ve decided on the format of your declaration form and collected them over the course of the tax year, you’ll be ready to submit them and claim your cash boost. To do this, you’ll need to compile a spreadsheet detailing the donations over the course of the last 12 months, which must include each donor’s:
You can claim up to 1,000 donations per spreadsheet, so if you’re lucky enough to exceed that amount, simply duplicate the rough framework, add the new donations, and submit them as a separate claim.
If you prefer to keep all your eggs in one basket, you can also use pre-approved software to submit your claims, such as The Donation App, Donations Coordinator, or Clarity Gift Aid. You can view a full list of the eligible software packages here.
Remember, you must ensure each donator signs your declaration form to claim your share of the £1.34 billion contributed by the government in Gift Aid.
As with anything, there are rules and exceptions, which include claiming Gift Aid on certain sponsorships, fees, collections and other events. You can explore the full range of what you can and can’t make a claim on in the government’s handy guide.
If you’d like to discuss Gift Aid in more detail, if you’re new to owning or operating your own charitable organisation, or if you’d simply like a seasoned professional to help you wade through the jargon, get in touch with our expert team today.