The value of Gift Aid to Charities

Published by Sam Rouse on 7 October 2021

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Many donations made to registered charities could be enhanced by 25% simply by taking advantage of the Gift Aid scheme and it is the responsibility of the charity to claim it.

Whilst Gift Aid is used by many charities and generates the sector £1.3bn in additional valuable funds, there is according to the Charity Tax Group report, much that remains unclaimed.

For many charities, it is the thought of the administration burden that prevents claims from being made or more simply the lack of awareness of this valuable relief to both charities themselves or their donors.   

Charities are encouraged to review and evaluate the added administration required to enable them to make a claim versus the value of the additional funds available, to further their charitable activities. 

In addition, charities should promote awareness of Gift Aid and the benefits to their donors.

The Gift Aid Scheme enables charities registered with H M Revenue and Customs to claim an additional 25p for every £1 donated, at no additional cost to the donor, providing certain conditions are met. 

Donations must be made from individuals who have paid the same amount or more in Income Tax or Capital Gains Tax in that tax year and have also completed a Gift Aid Declaration form that gives the Charity permission to claim. 

Most donations are eligible for this relief, but there are some notable exclusions, which include special rules around claiming Gift Aid on funds generated from sponsored events, donated goods, and charity auctions. 

Charities are also encouraged not to overlook cash donations received, for example in collection tins, where Gift Aid Declarations have not been completed. 

Once a charity is registered with HM Revenue and Customs for Gift Aid and is making claims, Gift Aid can be claimed in relation to cash donations (maximum of £30 limit per donation) by the Charity under the Gift Aid Small Donations Scheme.

If you are a charity and would like to review fundraising and Gift Aid Collection, please get in touch with our team today.

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