The Charity Tax Group (CTG) has welcomed changes to guidance on Gift Aid following “extensive consultation” between its representatives and HMRC officials.
HMRC updated its guidance on waived refunds and loan repayments to clarify the requirements for each to be considered a qualifying donation for Gift Aid relief.
For instance, HMRC clarified that an individual donor must ensure that they have paid enough tax to cover their donation “for the year in which the donation is deemed to be made”.
It added: “A company donor must take care only to claim relief once all relevant necessary accounting adjustments are made.”
CTG said that overall, the new text is “much clearer and improved”.
Kevin Russell, vice chair of CTG, said: “The publication of this revised guidance is very welcome and brings much-needed clarity to this relatively new understanding of Gift Aid on waived refunds and loan repayments. We’re most grateful to representatives from HMRC for engaging so positively with us on this.”
Updated guidance
CTG welcomed most of the changes that HMRC made but it said the amended wording in section 3.13.3 – “it’s conditional on repayment” – is unhelpful and could be clearer.
“The original wording that ‘A payment is not a qualifying donation if … it is made subject to a condition as to repayment’ is rather clearer,” it wrote on its website.
“For example, the new wording doesn’t make it crystal clear that if a charity appeal for funds states that ‘if insufficient funds are raised, donations will be returned to donors’, those donations will not be eligible for Gift Aid from the outset.”
Responding to the impact of Covid-19
In April 2020, HMRC implemented a temporary concession allowing some charities to claim Gift Aid on payments received for events cancelled due to Covid-19 after CTG suggested the move could help the sector weather the crisis.
HMRC confirmed in May last year that the change would be permanent, saying that it would consider donations made from a waiver of a right to either a refund or loan repayment to be eligible for Gift Aid.
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