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Gift Aid and how to claim it

Gift Aid is a gift. Every time an individual donates to your charity, you can claim an additional 25p on that donation – making a £10 gift worth £12.50 to your organisation. It’s a huge boost, and one of the best ways to stretch the value of individual donations. Yet despite this, HMRC estimate that 1 in 4 eligible donations are not being Gift Aided, and that £560m of funds go unclaimed every year. That’s money that could be used to change the world. So, we put together this handy post to help your organisation claim gift aid on charitable donations.

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Posted 18/08/2020

When does it apply? 

Like most things to do with tax, managing Gift Aid isn’t always easy. Gift Aid rules and regulations can be confusing for charities and donors alike. Not only does it link to tax-paying status, there are different rules for different types of donations. So where exactly do you start?

To claim Gift Aid, your organisation will need to be registered as a recognised charity or CASC (Community Amateur Sports Club). Next, you need to make sure that the individual you are claiming Gift Aid for is eligible, and that means they need to:

  • Be a UK tax payer.
  • Have paid as much income/capital gains tax as you want to claim in Gift Aid (that financial year).
  • Give you permission to claim on their behalf.

Next, you need to make sure that the donation itself is eligible. Full details are available on GOV.UK, but here are five gift aid rules for charities we think you should know: 

  1. Gift Aid only applies to donations from a direct individual, NOT on behalf of person or company.
  2. It must be a donation – not a mandatory request.
  3. Payments for good and services do not apply.
  4. You cannot claim on donations paid through Payroll Giving or charity cheques/vouchers.
  5. You must be able to provide a valid Gift Aid declaration. 

There are also a number of ‘special rules’ for events, sponsored challenges, membership fees, church collections, volunteer expenses, charity property, school fundraising, auctions and the selling of donated goods. It might seem daunting, but these are explained in detail on GOV.UK – so take the time out to have a good read. Trust us, it’s worth it! 

Small donations 

Got a bunch of smaller donations that you need to process? Don’t worry. Thanks to the Government’s Gift Aid Small Donation Scheme (GASDS), it is now possible to claim Gift Aid on amounts up to £30 without a declaration (yes, this applies to contactless payments too!). There’s a limit though. Annual small donation claims cannot exceed more than £2,000 for the given year, or £1,250 for previous years. You also need to keep accurate records – including total cash donations collected, the date of the collection, and the date money was paid into your account.

Find out about the small donations scheme.

How to process Gift Aid claims

We’ve said it before, and we’ll say it again. You need to make sure your donor has filled out a valid Gift Aid declaration. Fortunately, there are templates for this. Where possible, ask your donor to fill out a multiple use form - as this will cover previous and future, not just current donations.

All claims must be made within four years of the financial year end for that donation (two years for GASDS). For smaller charities with less than 1,000 claims to process, it is entirely possible to make your Gift Aid claim manually. This can be done by post with a ChR1 form or uploaded to the ‘Repayment Claims details’ page of your online charity account (provided you have filled out a Schedule Spreadsheet). If everything’s in order, you can expect your payment in around five weeks (claim Gift Aid online and this drops to four weeks).

If you have more than 1,000 claims to process, or you want to streamline your systems, you need to use a specialist software provider. GOV.UK offers a full list of approved suppliers, and you’ll be pleased to see Access thankQ at number two.

We know how much Gift Aid can mean to charities. That’s why we channeled 30+ years of experience towards the development of a bespoke Gift Management process. With Access thankQ on your team, it is easy to record and update any donor’s Gift Aid status. You can make single or batch changes, with intelligent Gift Aid Management tools keeping a log of eligible incoming donations, checking the quality of your data, and flagging any issues that need to be corrected. A few clicks later, and your claim is submitted straight to HMRC. As the team at Spinal Research found, these automatic processes make it quick and easy to submit Gift Aid claims. This doesn’t just same your team time, it means more money for your organisation. Just ask the Girls’ Day School Trust – their Gift Aid income rose by 300% after they started using Access thankQ! What would you spend it on?

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So there you have it. Gift Aid in a nutshell. Not the most glamorous subject, but an essential one. In a world full of silver bullets and digital innovations, it is important to get the basics right. GOV.UK is a great place to start. We also love that the Charity Finance Group launched Gift Aid Awareness Day to help organisations like yours navigate the ins and outs of Gift Aid processing (it’s on the 3rd October this year, don’t miss out!). And of course, if you want to find out how Access thankQ can help bring your Gift Aid claims under control, we are more than happy to help.

...Because throwing away your share of £560 million is something no charity can afford to do.