Fundraising activities are a key way of generating essential funds for your charity and with the added benefit of gift aid adding 25% to these funds, the importance of getting gift aid right cannot be overlooked.
Here we look at some common problem areas, opportunities for making the most of gift aid and a summary of some recent changes.
Common pitfalls/risks
1. Using inexperienced or poorly trained staff/volunteers to process your gift aid claims.
Gift aid is a complex area and it is worth investing time and resources in the correct training and awareness for your staff/ volunteers. Training sessions and written/video resources that can be used as reference materials are essential. Give it the attention it deserves.
2. Gift aid records being incomplete
HMRC is increasingly interrogating claims and expects a charity to be able to document the path of a donation from its donor source to the charity’s bank account, including linking the specific donor to a valid gift aid declaration.
3. Incomplete gift aid declarations
Follow up with donors where you believe there to be information missing from their gift aid declarations or where the declaration is very old and you wish to check their taxpaying circumstances. If you think there is an opportunity to claim gift aid, then take the initiative to get the gift aid declaration updated and unlock the gift aid.
Gift aid and tax legislation is always changing. Are you up to date with the latest changes?
Latest changes include:
- Reduced administration for end-of-year letters for retail gift aid, where the sales proceeds raised are less than £20 per annum.
- The government has confirmed plans to make legislation amendments to allow charities to continue to claim gift aid on annual membership subscriptions. This follows concerns about the implications of the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The intention is that the legislation will be in place prior to the enforcement of the DMCCA in spring 2026.
Gift aid opportunities
- If your charity has not yet claimed for gift aid or is behind with claims, do not delay, get your claim in as soon as possible. Time limits for claims are:
– Trusts: four years from 5 April in which the donation was received.
– Corporates: four years from end of accounting period in which the donation was received.
– Gift aid small donations scheme: two years.
- Where your charity has cancelled ticketed events or other fee-paying activities and the donor has indicated that they would like to donate the refund to your charity, you should now be able to claim gift aid on these amounts. You will need to hold a valid gift aid declaration for the individual and meet the other usual requirements for gift aid in order to make the claim. Individual donors waiving the right to a repayment of a loan made to your charity may also now attract gift aid, subject to certain conditions.
- Remember that some items “given” by your charity to your donors do not count as a benefit for the purpose of calculating the benefits limits. These relate to items given as a consequence of a donation, ie a thank you. One such item is naming rights, which can be very useful for your more generous donors as a way of saying thank you without jeopardising the availability of gift aid.
- Take care not to exclude donations where the donor has an unusual address. Claims can still be made for donors living in care homes, houseboats and pubs. For example, HMRC does not expect you to investigate every donor’s address details; if it looks reasonable, make a claim.
Louise Veragoo is social purpose tax director at HaysMac
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