Help
1
sheet
What is Gift Aid?
Gift Aid is a simple way for your charity to increase the
value of gifts of money received from UK taxpayers.
How does Gift Aid work?
When a UK taxpayer gives a gift of money to a charity,
they have already paid tax on that money. Because
charities are generally exempt from tax, they can claim
an amount from HMRC equal to the tax paid on that
money by the donor. This repayment from HM Revenue
& Customs (HMRC) is known as Gift Aid.
How much is Gift Aid worth to my charity?
By asking donors for permission to reclaim the tax that
they have paid on their donation, you can increase the
value of donations to your charity by one quarter.
The basic rate of tax has changed. Does this affect
Gift Aid repayments to my charity?
Until 5 April 2008 the basic rate of Income Tax was
22%. This meant that for every £1 qualifying donation
received, your charity could claim repayment of 28 pence.
From 6 April 2008 the basic rate of Income Tax is
20%. This means that for every £1 qualifying donation
received, your charity can claim repayment of 25 pence.
HMRC will automatically pay charities an extra 3 pence
for every £1 Gift Aid donation received between 6 April
2008 and 5 April 2011. This is called ‘transitional relief’
and was provided by Government so that charities had
time to adjust to the 2% reduction in basic rate tax – for
three years they continue to receive the same amount
(28 pence) for each £1 donation as they did until 5 April
2008. There is no need to claim this extra 3 pence – your
claim must be for 25 pence but you will automatically
receive 28 pence.
Find out more abut the time limits for claiming Gift Aid
in Help Sheet 11.
Toolkit tip: Claiming online is faster, can prevent
delays and save postal costs. The new service will have
built-in checks that will tell you about mistakes before
you submit your claim, reducing the need for claims to
be sent back to you to be corrected.
Why are Gift Aid declarations important?
It’s important that HMRC can verify the connection
between your tax repayment claim and the tax paid by
the donor. In other words, every claim must be supported
by a Gift Aid declaration that shows who paid the tax in
the first place.
Find out more about Gift Aid declarations in Help sheet 2
– What is a Gift Aid declaration?
Help
2
sheet
What is a Gift Aid declaration?
A Gift Aid declaration is a statement by a UK taxpayer
asking for their donations to be treated as Gift Aid
payments, so that the tax they have paid on the amount
donated can be claimed back by the charity receiving
the donation.
HMRC needs to be able to identify the donor from
the declaration they make, to check that they have
paid enough tax to cover the amount you are claiming
in their name.
The tax warning to donors
When you ask donors to make Gift Aid declarations, you
must explain to them that they have to pay, or have paid,
an amount of UK Income Tax or Capital Gains Tax that
is at least equal to the amount of tax that you, and all
other charities and Community Amateur Sports Clubs to
whom the donor makes a donation, are going to claim on
their donations.
• the proper name of your charity
• the name of the donor, with surname and initials
as a minimum
• the home address of the donor, with house
number/name and postcode as a minimum
• the donations that the declaration relates to.
The tax can be paid on income, savings and investments
(including tax credits on UK dividends) or capital gains.
If your claim is more than the tax paid by the donor they
will have to pay the difference to HM Revenue & Customs
(HMRC). Usually the donor must have paid tax for the
same tax year that the donation was made, 6 April to 5 April.
In some circumstances the donor can elect to have their
donation treated as being paid in the year before you
actually receive it. In this case the donor must have paid
enough tax in the earlier year to cover your claim. This
does not affect you, as your claim will still be for the year
when you receive the donation.
Toolkit tip: The model declarations included in this
toolkit have the tax warning printed on them to make
things easy for you. If you want to use your own
declarations, you should include the tax warning on
them so that you can show that you have given the
warning to your Gift Aid donors – see Help sheet 12.
A Gift Aid declaration therefore needs to show:
How can I produce declarations for donors?
There are different types of declaration:
• a paper declaration using the model form,
or something similar
• a declaration incorporated into a membership
application
• a declaration included in a sponsorship form
– see Help sheet 8
• a declaration printed on a collection envelope
• a declaration on a website where the donor’s
details are automatically recorded on a database
• a verbal declaration – this usually requires the
charity to send written confirmation of the
declaration to the donor.
Don’t forget to keep each donor’s Gift Aid declarations
for the longer of six years from the end of the claim
period that includes their last donation or 12 months
after you claim for their last donation. If you have a
lot of enduring declarations, that is, declarations that
cover future donations, you may want to scan them
and store them electronically. See Help sheet 5 for
more information. If before January 2012 you followed
previous guidance and destroyed records between 4 and 6
years old you will not be penalised. However if you have
kept your records from that period you must continue to
keep them as you may be penalised if you destroy records
which you are required to keep.
Find out more about Gift Aid declarations on the
HMRC website
Help
3
sheet
What can I claim Gift Aid on?
You can claim Gift Aid on gifts of money from
individuals.
•A gift of money is a voluntary donation for which
the donor receives little or no benefit or reward
(see Help sheet 4).
•Money can take the form of cash, cheques, direct debit or standing order payments, credit or debit
card payments, telegraphic transfers or postal orders.
Additionally, some payments to charities are treated as
donations for Gift Aid even though they are not strictly
defined as gifts. Please read the detailed guidance
‘Gift Aid rules in specific situations’ on the HMRC
website if you are considering claiming Gift Aid on
any of the following:
•Membership subscriptions paid to charities are treated
as donations as long as the payment is for membership
only and does not give the donor personal use of the
charity’s facilities or services. This rule only applies to
charities; CASCs cannot claim Gift Aid on membership
subscriptions.
•Admission charges to view a charity’s property can be
treated as donations if the payment gives the donor and
their family annual admission to view the property, or
if a donation of at least 10% more than the standard
cost of admission is made.
•Charity auctions often encourage people to pay more
for an item than it is worth, in order to support the
charity. These payments may be treated as donations
under certain circumstances. If you are thinking of
holding a charity auction, please look at the detailed
guidance before you start.
What else can I claim Gift Aid on?
Gift Aid can apply in other situations if the correct
procedures are followed carefully. Again, please read the
detailed guidance ‘Gift Aid rules in specific situations’
on the HMRC website if you are considering claiming
Gift Aid for any of the following:
•Sale of goods on behalf of an individual
Because Gift Aid applies to gifts of money, a donation
of goods to a charity is not a Gift Aid donation.
However, it is possible for the charity or charity shop
to offer to sell the donated items for the donor, who
may then choose to give the cash proceeds of the sale
to the charity using Gift Aid.
•Volunteer expenses
If a person incurs expenses while doing voluntary work
for a charity but does not claim them back, this is not a
gift of money and so Gift Aid cannot apply. However, if
a charity’s volunteers are paid expenses, and are free to
keep the money or make a gift to the charity, they can
use Gift Aid on that gift.
•Adventure fundraising events
Participants in these events usually pay a deposit
and are asked to raise a minimum amount for the
charity through sponsorship. Because taking part in
the adventure is a benefit to the person taking part,
there are restrictions on the sponsorship donations
that qualify for Gift Aid. For more information see
Help sheet 8.
What donations do not qualify for Gift Aid?
Charities cannot claim Gift Aid on donations from
companies, charity vouchers, donations received through
Payroll Giving, gifts of shares, gifts in kind or payments
for goods or services. Find out more about whether the
donation you have received qualifies for Gift Aid on the
HMRC website.
Help
4
sheet
What is a benefit for Gift Aid purposes?
Your charity may want to thank a donor in some way,
and this is a benefit. A benefit is anything that is given
to the donor, or a person connected to the donor – called
a ‘connected person’ – in return for a donation, for
example, a ticket to an event, a copy of the charity’s
magazine, a pen or a badge.
A benefit does not have to come directly from your charity.
Benefits for Gift Aid purposes also include items provided
to donors by third parties, for example, if a donation to
your charity entitles the donor to a free meal when they
visit a local restaurant, this is treated as a benefit.
What are the benefit rules?
As long as the benefit doesn’t exceed certain limits, the
donation will qualify for Gift Aid. If the benefit exceeds
these limits, the donation won’t qualify for Gift Aid.
The current limits for benefits to a donor or ‘connected
person’ are shown in the table below.
Benefit limits for donations
Amount of donation
Maximum value
of benefits
£0 - £100
25% of the donation
£101 - £1,000
£25
£1,001 +
Made between
6 April 2007
and 5 April 2011
5% of the donation (up to
a maximum of £500)
Made on or after
6 April 2011
5% of the donation (up to
a maximum of £2,500)
What benefits are treated as having no value for Gift Aid?
‘No value’ benefits include newsletters and magazines
that describe the work of the charity, priority booking
arrangements and small items of negligible value such
as stickers, pins and badges.
If your charity doesn’t give anything back to donors or
provides only small tokens of appreciation, it is unlikely
that you will need to consider the benefit rules in detail.
Find out more about providing benefits in return for
donations on the HMRC website.
What is a ‘connected person’?
A person is connected with a donor if that person is:
•the donor’s wife, husband or civil partner
•a relative of the donor
•the wife, husband or civil partner of a relative
•a company under the control of the donor or any
connected persons.
Relatives include brothers, sisters, sons, daughters,
parents, grandparents, grandchildren, step-children,
step-grandchildren, step-parents and step-grandparents,
but not nephews, nieces, uncles, aunts or cousins.
Help
5
sheet
Do I need to keep records
of Gift Aid donations?
Yes. Your charity or Community Amateur Sports
Club (CASC) needs to keep records that detail all the
donations included in your claim. The records should
always include:
•the amount of each donation;
•the name, address and postcode of the donor;
•when the donation was made; and
•a Gift Aid declaration from the donor.
Charities and CASCs should also keep good records
of all their income and expenditure, to help them
produce accounts at the end of the year. These records
will probably include such items as paper or computer
ledgers, bank statements, correspondence and invoices.
How long do I need to keep Gift Aid records?
Keep your Gift Aid records in an accessible format for
6 years after the end of the year or accounting period
to which the claim relates. For example:
•A charitable company or CASC should keep records
for the year ended 31 December 2007 until
31 December 2013.
•A charitable trust should keep records for the tax year
ended 5 April 2008 until 5 April 2014.
For information about charitable trusts and charitable
companies, see Help sheet 6.
How long do I need to keep Gift Aid declarations?
Gift Aid declarations are part of your Gift Aid records
and should be kept for 6 years after the end of the year
or accounting period that includes the last donation to
which they relate, or at least 12 months after you claim
for the last donation to which the declaration relates
if this is later.
If you have declarations that include donations to be
made in the future, you may have to keep these for many
years. The important thing is that you can link each
donation to an identified donor and show that they have
given you a valid Gift Aid declaration.
Find out more about Gift Aid record keeeping and audit
requirements on the HMRC website.
Help
6
sheet
Is my charity a trust or a company?
This is important because it affects:
•how HMRC calculates any interest on your repayment;
•the time limits for claiming and keeping your records.
Whether your charity is a trust or a company depends
on how it was set up.
For tax purposes:
•a charity set up in the UK under a will or a formal
Deed of Trust is a trust;
•all other charities and Community Amateur Sports
Clubs (CASCs) in the UK are treated as companies;
•for charities and CASCs outside the UK the situation
is more complex. Go to the HMRC website for more
guidance.
A trust is a dealt with under the Income Tax rules. A
company is dealt with under the rules for Corporation Tax.
If your charity or CASC is a company
The important date for tax purposes is the date to which
you prepare your annual accounts. You will be asked to
enter this date on the Gift Aid claim form.
If your charity is a trust
The important date is 5 April (the end of the tax year),
and this is the date you should put on the form.
Toolkit tip: The new Charities Online service will
have built-in checks and help to make sure you get the
right dates in the right boxes.
Trustees
All charities have trustees, but this does not mean that
the charity is a trust for tax purposes. The trustees are
the charity officials who have responsibility for the
actions of the charity and how its funds are used.
‘Trustee’ is a legal term, and your trustees may be
known by other titles such as governors or directors.
Where Gift Aid is concerned, trustees are responsible
for making sure that a charity:
•only claims Gift Aid on donations that meet all the
requirements of the Gift Aid scheme;
•holds a Gift Aid declaration for every Gift Aid
donation (see Help sheet 5);
•keeps records that show the link between the
donor, the donation and the Gift Aid claim
(see Help sheet 2); and
•uses all of its Gift Aid and other income for the
charitable purposes for which it was set up.
Help
7
sheet
Community Amateur Sports Clubs
When you register with HMRC as a Community
Amateur Sports Club (CASC), this entitles you to claim
Gift Aid as well; you do not have to register twice.
UK-based CASCs are treated as companies for tax
purposes (See Help sheet 6).
Find out more about registering as a CASC on the
HMRC website.
Gift Aid
Individuals can make gifts of money to registered
CASCs using Gift Aid in the same way as they make
gifts to charities.
Important: All the help sheets and claim forms in this
toolkit can also be used by CASCs and references to
charities apply equally to CASCs except where stated.
Remember that Gift Aid is only available for voluntary
donations of money and not for payments for goods or
services such as personal use of sports facilities (see Help
sheet 3). CASCs cannot claim Gift Aid on membership
subscriptions under any circumstances.
Maximising Gift Aid for CASCs
Clubs are free to set their own membership fee levels,
but HMRC would look closely at any club that reduced
its fees significantly and requested a donation for the
balance between the old and new fees. Most clubs will
need to make sure that the membership fees at least
cover the running costs. Your club could then suggest a
voluntary donation on top of the membership fee and this
would qualify for Gift Aid, but you would need to make
it clear to new members that they could join without
making the donation.
Find out more about Gift Aid for CASCs on the
HMRC website.
Help
8
sheet
How do I run a sponsored event
and claim Gift Aid?
Whatever kind of sponsored event people take part in
to raise money for your charity, there is one important
principle to remember: it is not the participant who is the
donor. The people who sponsor the participant are the
donors and these are the people entitled to use Gift Aid
to increase the value of the amount they pledge as
sponsor money. The rules and requirements are the
same as for any other gift of money (see Help sheet 1).
Toolkit tip: You can use the model sponsorship form
in the toolkit.
Sponsors must complete a Gift Aid declaration
Every sponsor who wishes to make a donation using Gift
Aid must make a Gift Aid declaration. This can be done
by simply ticking the box on the right-hand side of the
sponsorship form. For the declaration to be valid, the
sponsor must complete all the other columns in full.
You should take care that sponsors write their full name
and not just, for example, ‘Grandad’ or ‘Auntie Sue’.
Their full name and home address are required so that
HMRC can identify them (see Help sheet 2).
Does your event provide a benefit to the participants?
Some charities organise adventure events to raise money.
The participant pays a small fee to take part and makes
a commitment to raise a minimum amount of
sponsorship money. Please note that if there is a benefit
to the person taking part, sponsor monies pledged by
connected persons may not be eligible for Gift Aid
(see Help sheet 4).
How do I fill in the Gift Aid online claim?
For donations raised through sponsored events you don’t
have to enter every individual sponsor on to your Gift Aid
claim schedule – just enter in the claim schedule the name
of the participant and the total of the Gift Aid donations
on their sponsor form, but exclude sponsorship donations
of over £500 which must be entered seperately. You must
also ensure that only the confirmed Gift Aid donations
are included in the claim, and keep the sponsorship
forms to show all the individual sponsors and Gift Aid
confirmations with your other Gift Aid records (See Help
sheet 10).
Download the sponsorship and Gift Aid declaration form
from the HMRC website.
Help
9
sheet
How do I claim Gift Aid and how often can I claim?
To make a claim for Gift Aid, you should use the
HM Revenue & Customs (HMRC) Online Charities
Repayment Service and make a claim online. (There is a
manual repayment form ChR1 for those who don’t have
access to the internet).
•A charity receiving regular monthly donations may
wish to claim each month.
•Other charities may think that a quarterly claim or an
annual claim is enough.
•If you want to claim more than once a year, each claim
should be for at least £100.
Toolkit tip: There is online help to assist you to make
an online claim.
Who can make a claim?
When you register for Gift Aid, you authorise who
can make the claim. You can replace or add additional
authorised persons or replace other officials by sending
form ChV1 to HMRC, who will need to check that the
person who completes the claim is an authorised person.
How are repayments made to my charity?
HMRC make your repayment by direct payment into the
charity’s bank account.
A direct payment into the charity’s bank account is the
quickest and safest method of repayment. If you change
bank account you need to tell HMRC on form ChV1
thirty days before you make a claim.
How do I complete a Gift Aid schedule?
When you make a claim, you must provide a schedule
spreadsheet showing the donations that the claim relates
to. The schedule must be set out in a certain way, so that
HMRC can process your claim correctly, and you can
attach your schedule to your claim form. Find out more
about schedule spreadsheets in the guidance on Charities
Online on the HMRC website.
How much time can be covered by a single claim?
The period of your claim starts on the date of the first
donation included in the claim, and ends on the date
of the last donation in the claim. One claim can cover
several years. The income can be entered on the claim
form schedules in any order and for any period (except
for aggregated donations).
If you chose to aggregate donations of £20 or less, you
must show these aggregated amounts clearly on your
schedule spreadsheet so that HMRC can add the correct
amount of interest, if it’s due. If your charity is a trust,
these need to be shown for each tax year. If your charity
is set up as a company, you should show aggregated
donations for your accounting period.
Help sheet 6 shows you how to decide whether your
charity is a trust or a company.
There is guidance on how to make an online claim on
the HMRC website.
Transitional relief
For donations received between 6 April 2008 and 5 April
2011 a supplement called transitional relief is added to
your claim. You do not need to work this out as HMRC
will calculate it and automatically pay it to you – see Help
sheet 11.
Help
10
sheet
How should I list donations on the schedule?
There are different ways of entering your donations on
to a Gift Aid Donations Schedule. If you’re using HM
Revenue & Customs (HMRC) Charities Online Service
and filling in an online claim form, you can complete
a schedule spreadsheet and attach it to your repayment
claim. If you don’t have access to the internet you can fill
in a paper schedule. Filling in the schedule properly helps
to ensure that you get the right amount of repayment
back without delay. It is important that the entries are
accurate so that the correct amount of tax is repaid.
Toolkit tip: There is step by step guidance on how to
get, fill in and attach the schedule spreadsheet to your
claim on the HMRC website. If you don’t have access to
the internet, you can fill in paper claim form, the ChR1.
How do I list donations from individual donors?
Enter the name of each donor for whom you hold a Gift
Aid declaration, the address, postcode, date of their
donation and the amount of the donation in the columns
on the schedule spreadsheet. If you don’t have the
postcode, enter as much of the address as you can in the
address box. You will need to get the donor’s postcode
for future claims.
Sponsored events
For claims made using the online form, all the donations
for someone taking part in a sponsored event can be put
as one entry under the name of that participant.
This means you don’t need to list every individual donor
who sponsored the person. Only individual donations
from a donor of £500 or more shown on individual
sponsor sheets will need to be separated out and listed
individually on the online claim form.
Remember, only donations for which the donor has
ticked yes to Gift Aid should be included here. You must
keep each participant’s sponsorship sheet in your records,
as this will show the individual donors and their Gift
Aid declarations. If you are considering organising a
sponsored event, you should read Help sheet 8.
Adding donations together (aggregated donations)
If you have a number of small donations, of £20 or less
each, from different donors, you can add them together
and make only one entry, but the total of each line must
not be more than £1,000. The aggregated donation
indicator on the claim should be set to ‘yes’. You can
choose not to aggregate such donations, and enter each
donation separately if you prefer. When aggregating
donation you need to decide whether to do this on a
weekly, monthly, quarterly or yearly basis. Obviously
this depends on how many donations you get and how
often you claim. However, you must make sure that your
aggregation does not cover a period greater than a tax
year if your charity is a trust or the accounting period for
others, such as companies. For example, if your charity
is a trust only, donations received within the period 6 April
to 5 April can be aggregated together. So, if you were
claiming for two years from 6 April 2011 to 5 April
2013, you would have to split the aggregation into two –
6 April 2011 to 5 April 2012 and 5 April 2012 to 5 April
2013. You must keep records of the individual donations
of £20 and under, including the Gift Aid declarations as
HMRC may ask to see them.
Other types of schedule
A standard donation schedule is available for the online
claim, or you can attach your own schedule provided it is
in the correct format.
Help
11
sheet
What are the time limits for claiming Gift Aid?
There are time limits for making a claim, so you are
advised to make sure that you receive all the Gift Aid
that you are entitled to by claiming at least once a year.
It might be a good idea to include preparation of your
claim as part of your annual accounting work.
The time limits for claiming depend on whether your
charity is a trust or a company (see Help sheet 6).
Charitable trusts
The relevant period for charitable trusts is the tax year
which runs from 6 April in one year until 5 April in the
following year.
From 31 March 2010 a charitable trust must make its
claims within 4 years of the end of the tax year in which
the Gift Aid donations were received.
For example:
•A claim for the year ended 5 April 2009 must be made by 5 April 2013.
CASCs and charities treated as companies
The relevant period for CASCs and charitable companies
is their accounting period. The accounting period is the
12 months covered by their financial accounts.
From 31 March 2010 claims by CASCs and charitable
companies must be made within 4 years of the end of
the accounting period in which the Gift Aid donations
were received.
For example:
•A claim for the year ended 31 December 2010 must
be made by 31 December 2014.
Are there time limits for transitional relief?
Transitional relief is paid as a supplement on certain
Gift Aid claims for the years from 6 April 2008 until
5 April 2011. The time limits for the payment of
transitional relief to your charity or CASC are different
from those for making a Gift Aid claim.
You do not have to claim transitional relief; it is an
automatic payment. However, it will only be added to
your repayment if you make a relevant Gift Aid claim
within 2 years of the end of the period or year to which
it relates. For example, suppose a charitable trust wishes
to claim Gift Aid for the year ended 5 April 2010:
•If the claim is made by 5 April 2012, the trust
will receive transitional relief in addition to its
Gift Aid repayment.
•If the claim is made after 5 April 2012 but before
5 April 2014, the trust will receive its Gift Aid
repayment but no transitional relief will be paid.
•If the claim is made after 5 April 2014 HMRC
will not be able to repay anything.
Can I make a claim for earlier years?
Yes. You can do this if you have not claimed Gift
Aid before or if you have recently received Gift Aid
declarations from donors who have made gifts of money
in the past 4 years (see Help sheet 2).
Help
12
sheet
What happens if my charity
is selected for a Gift Aid audit?
HMRC has a responsibility to check that charities are
claiming the correct amounts of Gift Aid, and auditors
are here to help you to do things right.
Whether the auditor asks to visit you or asks you to
send in your records, they will want to see the following
items:
Sometimes HMRC can carry out checks without
contacting you, but on other occasions will ask you for
additional information or documents. This is what is
called an audit, and it can involve a visit to your charity
to look at your records. HMRC can also do a review
by correspondence.
•Gift Aid declarations for the donations included in
your claim;
•evidence to show that you received and banked
the donations;
•evidence to show that you received and banked the
tax repayment;
•any other records or documents you may have relating
to the claim; and
•a copy of your charity’s latest accounts.
An audit has three main objectives:
•to check that the donations meet the requirements
of the Gift Aid legislation (see Help sheet 3);
•to check that a valid Gift Aid declaration is held
for every donation included in your claim
(see Help sheet 2); and
•to check that any benefits given to donors are within
the limits (see Help sheet 4).
If the auditor finds mistakes with your claim, your
charity may have to repay some of the Gift Aid you have
claimed. The auditor will explain what the errors are,
how to correct them if possible and how to avoid
them in future.
If your charity is selected for an audit and you want
more information, you can talk to the auditor or find
out more about audits by HMRC Charities on the
HMRC website.