Gift Aid: a user's guide

Donations that qualify for Gift Aid

A donation will qualify for Gift Aid relief providing that:

• It is accompanied by a Gift Aid declaration and,
• Conditions A to F (the "Gift Aid Conditions") are met:

1. The gift is a payment of a sum of money.
2. The payment is not subject to any repayment conditions.
3. The payment is not a donation under the payroll giving scheme (section 713(3) ITEPA 2003).
4. The payment is not deductible in calculating the donor's income.
5. The payment is not related to any arrangement involving the acquisition of property by the charity from the donor or persons connected to him.
6. Any benefits associated with the gift do not breach certain set limits ("benefits").

What is a gift?

A gift includes a payment for no consideration or in consideration of a small benefit.

• A payment in return for goods, rights or services is not a gift.
• An overpayment over and above the market value of goods, rights or services can be a gift.

What is a payment?

A payment includes payment by cash, cheque, direct debit, credit card, debit card, postal order, standing order, banker's draft, telegraphic or online banking transfer.

A sum of money

A "sum of money" can be in any currency. It excludes:

• A gift of services or non-cash assets
• A release of a debt or a waiver
• An accounting or book entry
• A gift by will

Gift Aid can apply to payments made of:

• Subscriptions
• Membership fees
• Successful bids at charity auctions and fund-raising events
• The proceeds of the sale of the donor's goods
• Sponsorship payments

Gift Aid does not apply to:

• Gifts of money with conditions attaching
• Payments for goods or services
• Set participation fees
• Payments made using charity vouchers or cheques
• Loan waivers
• Barter transactions
• Gifts from companies

Benefits

• Gift Aid is restricted where a charitable donor receives a valuable benefit as a consequence of making a donation.
• The level of benefit that is permissible is strictly calculated according to the size of the donation.
• It can be difficult to value benefits, especially where there is no commercial equivalent.
• There are some oddities within the rules: for example, free entry to view charity property in return for a donation that is at least 10% more than the usual admission charge fee is not treated as a benefit.

Defining benefits

A benefit is treated as being associated with a gift if the donor or a person connected to him receives the benefit as a consequence of making the donation.

The value of any benefit must not exceed defined limits in order to meet Gift Aid condition F.

This test is decided on the basis of the result of a benefit value test.

• For single gifts: on a benefit value per gift basis.
• For a series of gifts: on the basis of an aggregate value.

Benefit Value Tests

Per gift:

The value of a benefit deriving from a gift is calculated as follows:

It follows that advisers should ensure that charities and clubs have a full grasp of the benefits rules to ensure that there is no risk that a benefit and a donation may become linked.

or

Where a donor makes a series of gifts:

The Aggregate Value Test ensures that the maximum benefit that can be received by the donor taking into account all Gift Aid donations made during the tax year is £2,500 (£500 up to 6 April 2007).

Anti-avoidance: gifts and benefits linked to periods of less than 12 months

The Benefit Value Test limits are modified in order to prevent avoidance of the benefit rules by splitting gifts.

Where gifts and benefits are linked the further conditions A, B, C or D, as follows, must be met:

What is the "annual equivalent" of a benefit or gift?

For the purposes of modification of the benefit value per gift rule, the annual equivalent of the value of a benefit, or of the amount of a gift, is calculated as follows:

Step 1

Multiply the value of the gift and then the benefit by 365.

Step 2

If condition A or B is met in relation to the benefit (and neither condition C nor condition D is met in relation to it), divide the results by the number of days in the period of less than 12 months.

If condition C or D is met in relation to the benefit, divide the results by the average number of days in the intervals of less than 12 months.

Valuation of benefits

• Valuation can be difficult, especially where there is no market value or other method of comparison available.
• The starting point is that a benefit is valued on the basis of the value to the recipient rather than the cost to the charity of providing it.
• Where a benefit has no market comparison the method of valuation may be made by taking the cost to the charity of creating it - for example when an event is staged that is not open to the general public the benefit might be determined by taking the cost divided by the number of expected attendees.

Items not quantified as benefits for Gift Aid Condition F

• Small benefits; provided that they fall within the tests above.
• The right of admission to view charity property if it is granted for a period of at least a year at the same times as the general public can gain admission or in return for a donation of at least 10 per cent more than the admission charge.
• A simple acknowledgement of a donor's generosity provided that it is not an advertisement.
• Literature describing the work of the charity or CASC such as newsletters, annual reports or a members' handbook.
• Events or dinners where there is no significant element of additional fundraising involved.

Companies and Gift Aid

Charitable companies are able to reclaim Gift Aid on donation payments made by individuals.

Donations made by companies to a registered charity or CASC are not within Gift Aid relief. However a company may receive Corporation Tax relief on the charitable donations it makes as a deduction from its profits provided that:

• The donation does not come with a condition about repayment.
• The company or a person 'connected' to the company does not receive a benefit over a certain value in return for the donation.
• The donation is not subject to a condition or arrangement that the charity will purchase property (other than as a gift) from the company or a connected person.
• Relief is given after all other reliefs other than by group relief.
• Legislation: Part 6 of CTA 2010,
• See HMRC: Gifts to charity made by companies

Companies may also obtain tax relief on the cost of charitable gifts other than cash:

• See HMRC: Gifts of land, buildings or shares by companies
• See HMRC: Gifts to charity of company equipment, trading stock or staff help

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Charities are able to claim Gift Aid relief on many different types of payment received from individuals. This section summarises some of the special rules that apply to such donations.

• Fundraising: trips and events
• Fundraising: sponsorship
• Schools: special fundraising days
• Educational school trips: voluntary parental contributions
• Educational trusts: voluntary parental contributions
• Church collections
• Membership subscriptions
• Admission fees
• Charity auctions
  
• Voluntary workers expenses
• Goods: when sold and proceeds gifted

A charity may obtain Gift Aid relief on payments received in order to finance trips and events.

Donation payments made by both the supporters of the charity and participants taking part in a trip or attending an event may each qualify for Gift Aid:

• Where a supporter makes a donation this will qualify for Gift Aid.
• Where a trip or event is free and open to general participants, those who participate are able to Gift Aid any voluntary contributions that they decide to make towards its cost.
• Attendance should not be conditional on making the donation.

How this works:

Donations made by the supporters normally pass the benefit test because:

• They do not take part in the trips and events.
• They receive no benefits as a result of their payment.

The participants pass the benefit test because:

• The trip or event has already been funded by the contributions of others.
• There is no entry fee and so a donation made does not secure any additional benefit.

Payments that fail to qualify for Gift Aid

A payment made to participate in a trip or event will not qualify for relief if the payment is used by the charity to part fund the event. This is because it fails the benefit test, the value of the benefit will in those circumstances be the equivalent to the sum paid to take part.

A participant can alternatively be asked to pay a fixed fee to cover the proportion of the costs of running the event and then separately make a donation. The donation will then be separate from the participation fee and will qualify for Gift Aid.

Summary

For further information see Charity events

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Fundraising: sponsorship

A charity may hold fundraising adventure or challenge type events such as sponsored walks, cycle rides, or adventure trips abroad. Participants taking part in these types of event are encouraged to obtain sponsorship which is then passed to the charity.

Where the cost is fully funded by the charity

• Where the event is fully funded by the charity and free to participants, all sponsorship payments may potentially be Gift Aided.

Where the participant pays an entry fee

• Where the event is not fully funded by the charity, participants may be asked by the charity to contribute to its cost, typically they may be asked to pay a non-refundable deposit, or a registration fee, and then raise sponsorship.
• In order to work out the value of a benefit, the charity is required to work out the cost, per participant, of holding the event.
• Where a payment by the participant equals the cost per participant, the payment will not qualify for Gift Aid because the benefit limits are exceeded (the benefit = the cost to the participant).

Where the participant must raise sponsorship to take part

• Sponsorship by parties connected to the participant is treated as being made by the participant and as such they will only qualify for Gift Aid if the benefit limits are not exceeded.
• Sponsorship payments made by persons not connected to the participant are unaffected and can be Gift Aided.

Conversely, if the participation cost of the event is kept entirely separate from sponsorship, Gift Aid relief may be claimed on sponsorship funding. In order to qualify a participant must pay the charity the full advertised cost of the event from his own resources, so that the value of the donor benefit is reduced to nil.

Sponsorship and connected persons

When a participant is required to collect sponsorship in order to participate in an event, any sponsorship pledged by a person connected with the participant is treated as if it was donated by the participant. This has a significant effect on the benefit value tests. Taking the example above:

If Jane had agreed to pay £750 to the charity on her own account, and contributed a further sum made up of donations received from sponsors made up of family members, the total contribution would have to exceed £15,000 in order to pass the benefit test (£750 is 5% of £15,000).

Charities should take all reasonable steps to ensure that Gift Aid payments are not received from persons connected to a participant in order to avoid breaching the benefit value tests. HMRC expect a participating charity to include in the event literature and on the sponsorship form:

• An explanation that sponsors connected to a participant cannot make their donations by Gift Aid; and
• the definition of a "connected person".

What is a "connected person"

A person is "connected" with a donor if that person is:

• the wife or husband
• a relative (brother, sister, ancestor (e.g. mother) or lineal descendant (e.g. grandson)
• the wife or husband of a relative
• a company under the control of the donor, or under control of connected persons.

HMRC has produced a template sponsorship form.

For further information see Adventure fundraising events

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Schools: special fundraising days

Schools with charitable status may hold special fundraising days in order to raise funds for themselves or in support of external charities. Typically, on a “non-uniform” day, children donate a small sum, usually £1 and in return are allowed to wear their own clothes for the day. Similar days may feature “crazy hair” “ mad hatters” or “wrong trousers”.

HMRC hold the view that as the children are required to make a donation to take part in the fun day, the benefit of the event is the donation and so the benefits value test is not met. However, where a donation is not mandatory, and children are able to participate even when they fail to make a donation then all donations made should potentially qualify for Gift Aid relief.

Where a school holds a special fundraising day for an external charity, it is receiving donations as agent for the charity and has no entitlement to the donations it receives. The charity is able to claim any Gift Aid relief (providing that any donations are accompanied by a Gift Aid declaration and audit trail).

For further information see Gift Aid for school charities

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Educational school trips: voluntary parental contributions

The benefit value tests may be exceeded where schools seek to claim Gift Aid relief on contributions for student activities received from parents.

The rules in this area are also complicated by the fact that different types of school face further restrictions: whilst many private schools retain charitable status, state funded schools are not permitted to charge pupils for visits undertaken as part of the National Curriculum which occur during school hours.

• A school may ask parents for voluntary contributions in respect of an educational trip.
• A voluntary donation paid by a parent to a school will qualify for Gift Aid relief provided that it is not conditional on other parental gifts and all children are treated equally as a result.

If a trip is set to go ahead, irrespective of any parental donations, then a voluntary parental contribution may be eligible for Gift Aid.

This is provided that:

• The payment is not conditional on the donations of others.
• It is not refundable.
• Any benefit arising from the donation does not exceed the maximum permitted,

Participation payments and benefit limits

A benefit is calculated on the basis of the average cost per pupil including travel costs, trip insurance, cost of entry and associated educational material, cost of food and drink supplied and any other costs associated with the trip (costs averaged per pupil if appropriate).

For further information see Gift Aid for school charities

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Educational Trusts: voluntary parental contributions

An Educational Trust may be established to provide education for children as an alternative to State education. Parents are often not required to pay any set fees to cover the costs of tuition and other overheads, but instead may make payments described as donations.

• Parental donations will only qualify for Gift Aid where HMRC can establish that the Trust would be able to meet the costs of providing the education in the absence of the donations.
• A payment (by donation or otherwise) made in return for educational benefits provided does not qualify for Gift Aid.
• Where a Trust is independently financed (by regular fees, regular donations, endowment or grant funding) and it is not dependent on additional parental donations, the cost of providing tuition etc for that parent’s child will not be treated as a benefit in consequence of the parental donation. Providing the other Gift Aid criteria are met, Gift Aid relief might be available on those donations.

HMRC says that the situation for each Trust is to be judged on its own merits.

• For further information see http://www.hmrc.gov.uk/charities/gift_aid/rules/school-charities.htm

Church collections

Charitable churches

A church may be recognised as a charity by HMRC. All donations received from collections or other means may attract Gift Aid relief provided that they are accompanied by a Gift Aid declaration.

• A church "envelope scheme" is being planned for 2013: it is intended that a donor's details can be recorded on the envelope which can then be retained as part of the charity's audit trial.
• Regular donors should complete a single Gift Aid declaration to Gift Aid all future donations paid.

Churches collecting on behalf of charities

A church may make collections on behalf of various charities and these may qualify as Gift Aid donations.

If the church has not exercised any discretion in collecting donations, so that donations are merely given to the church to pass on to a particular charity then:

• The church has no entitlement to the donations it collects on behalf of the charity.
• The charity is able to claim any Gift Aid relief (providing that donations are accompanied by a Gift Aid declaration and audit trail).

If the church exercises its discretion and decides to open a fund for donations to a particular charity, then:

• The fund collected becomes a designated fund of the church;
• the donations form part of the church’s income; and
• the church is able to claim Gift Aid relief (subject to the normal requirements).

It is expected that the Gift Aid tax reclaimed should be passed to the charity by the church.

For further information see Church collections

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Membership subscriptions

A payment made in respect of a membership subscription to a charity or CASC is treated as a gift provided that the following conditions are met:

• The payment does no more than secure membership of the charity.
• The payment does not secure a right to personal use of any facilities or services provided by the charity.

Benefits and subscriptions

A benefit received as a result of the payment of a subscription, such as:

• the receipt of periodic newsletters explaining the work of the charity, or
• an opportunity to visit and view the work of the charity,

is not treated by HMRC as a benefit for the purposes of the Benefit Value Test.

A subscription payment which enables the donor to use the charity's facilities will not qualify for Gift Aid as it secures a benefit (subject to the Benefit Value Test limits).

Personal use of facilities or services may include:

• Various training or playing benefits obtained for an additional fee over and above basic membership.
• Individuals’ tuition or coaching
• Other educational instruction
• Free or discounted use of, say, a golf course or a swimming pool, not available on similar terms to non-members.

An individual donor may pay for family membership or on behalf of a minor child on the same terms. The donor must, however, be the person who has given a Gift Aid declaration to the charity.

For further information see Membership subscriptions

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A "relevant right of admission" is disregarded as a benefit for Gift Aid.

A right of admission means a right which:

• Benefits the donor or his family members (not necessarily all at the same time),
• Authorises admission to premises or property to which the public are admitted on payment of an admission fee,
• Authorises admission to those premises or that property without payment of the admission fee or on payment of a reduced fee.

Admission conditions

A right of admission is a relevant right of admission if:

• Conditions A and B are met, and
• either condition C or condition D is met.

Condition A: the opportunity to make a gift and to receive the right of admission in consequence is available to the public.

• It is not conditional on making a Gift Aid declaration.

Condition B: is that the right of admission is a right granted by the charity for the purpose of viewing property that is preserved, maintained, kept or created by a charity for its charitable purposes. Such property includes:

• buildings
• grounds or other land
• plants
• animals
• works of art (but not performances)
• artefacts
• property of a scientific nature

Condition C: the right of admission applies, during a period of at least 12 months, at all times at which the public can obtain admission.

• The charity is however permitted to restrict access for up to five days per year to allow for special charity events.

Condition D: a member of the public could purchase the same right of admission, and

• the amount of the gift is greater by at least 10% than the amount the member of the public would have to pay.

The same right of admission

This means a right relating to the same property, classes of persons and periods of time as the right received in consequence of the gift.

Summary

For further information see HMRC:Selling goods on behalf of individuals

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Charity auctions

• Charities hold auctions in order to raise funds.
• They auction a range of different goods, services and often "promises".

A successful bid for an item at a charity’s auction can be Gift Aided provided that the benefits associated with the bid do not breach the prescribed Benefit Value Test limits.

The valuation of the benefit received in successfully bidding for an item at auction varies according to the nature of the item:

• If the item is commercially available, the value of the item for the benefit limit is the 'shop sale' price of the item.
• If the item is commercially available but it has an enhanced value, for example because it has been owned by a celebrity, the market value is deemed to be unassertainable, this means that no part of the successful bid at action may be Gift Aided. HMRC has changed it view on this, previously it agreed that the benefit value was the actual price achieved at auction.
• If the item auctioned is a “promise” its benefit value will generally be the auction price, as this is assumed to be its market price, unless there is another commercial equivalent.

A charity will need to consider the valuation of each item in advance of the auction. If a charity can advise potential bidders in advance this will ensure that successful bidders complete Gift Aid declarations on the day.

For further information see Charity Auctions

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Voluntary workers expenses

Charities will reimburse voluntary workers for their out of pocket expenses. Provided that a volunteer does not profit from the arrangement there are no tax consequences for the volunteer.

• If a volunteer forgoes claiming the expenses he incurs, the amount forgone will not qualify for Gift Aid. This is because an amount forgone is not a payment.
• A volunteer may not donate his time in lieu of a payment under Gift Aid because there is no payment made.

In order to make a donation that does qualify for Gift Aid a volunteer should claim any expenses due back from the charity, and then make a donation payment to the charity separately.

For further information see Voluntary workers expenses

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Goods: when sold and proceeds gifted

Where a donor donates goods to a charity in order to allow the charity to sell the goods in order to raise funds, the goods do not amount to payments and so Gift Aid relief cannot apply.

How to claim Gift Aid on goods sold

HMRC regards the practice of claiming Gift Aid on sold goods as pushing the boundaries of Gift Aid relief. As a consequence, it expects charities which seek to claim relief in this way to operate strictly within its guidance.

A charity, or its trading subsidiary may act as a sales agent on behalf of an individual donor. The proceeds of any sale received may then be potentially Gift Aided.

In order for this to work:

• Legal or beneficial title to the goods to be sold never passes to the charity, it (or a trading subsidiary) sells the goods as a selling agent, on behalf of the donor.
• The donor may potentially Gift Aid any sales proceeds back to the charity, or he may keep the proceeds for himself.
• The donor may complete a Gift Aid declaration before the charity markets the goods, but this is ineffective unless the charity follows the next step and maintains a full audit trail.
• Once the goods are disposed of the charity is required to write to the donor and advise them that, unless he gives notice otherwise, in 21 days the sales' proceeds willl be treated as a Gift Aid payment.
• HMRC does not require the donor to write back again.

The charity must retain an audit trail to show:

• A copy of any written agreement made with the owner in order to sell the goods on their behalf.
• Documentation that the owner has been notified of the sale proceeds, and that they have been given the opportunity to receive all of the net proceeds.
• The Gift Aid declaration, together with the donor's name and address.
• Records to show how the goods are identified as belonging to a particular owner.
• In the case of a trading subsidiary of a charity records to show how the sale proceeds are remitted to the charity.

Acting as a sales agent may have unforeseen additional tax consequences for the charity or its trading subsidiary:

• Selling activities are likely to amount to trading; the charity may be liable to direct tax on any profits.
• It may be required to VAT register if its business activities exceed the registration threshold.
• The gift may fail as the potential donor may decide that he wants to retain his sales proceeds.

For further information see Selling goods on behalf of individuals

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Gift Aid Top Ten Tips

Applying to use Gift Aid

Gift Aid can only be claimed back by a charity or Community Amateur Sports Club (CASC) that has applied to HMRC for a Gift Aid registration number and been approved by HMRC.

Registration

A charity or CASC is required to register with a charity regulator or HMRC: it depends on the type of body, its size and location.

Application to HMRC

Once a charity has made an application to HMRC it will be given a Gift Aid reference number and may claim tax repayments under Gift Aid.

• A responsible person, who is not the tax agent is permitted to apply to HMRC.
• The responsible person should have signed a Fit and Proper Person's declaration.

Declaration: Fit and Proper Persons

Anyone acting as a manager of a charity or CASC must declare themselves "fit and proper" to act and must complete a declaration to that effect. See Fit and Proper Helpsheet and Model declaration.

Charities

Charities complete form ChA1 (this is only available online)

To qualify as a charity for tax purposes an organisation must:

• Be established for charitable purposes only
• Be based in the EU, or Iceland or Norway
• Be registered with a regulator (see table above)
• Be managed by an "authorised official' and 'responsible' persons

To complete the form the following details are required:

• Full name and address of charity
• Contact details, email, telephone number
• The name of the charity's regulator (if registered) together with a copy of the registration notification from that regulator
• Where the charity is not registered it is required to explain why it has not done so
• Tax references: UTR or Corporation Tax and VAT
• Details of the responsible person
• Details of the charity's governing document and date that this became effective. This can be its rules or constitution, memorandum or articles or foreign equivalent, a will or trust deed, an Act of Parliament.
• It must state whether it has used an approved or model document of the type approved by a national association, parent or principle regulator and if so whether it has retained the exact wording. If any changes have been made these must be disclosed.

See HMRC's guidance: How to complete Form ChA1 HMRC Charities Application Form

Community Amateur Sports Club (CASC)

• Voluntary donations
• Sponsorship of individuals raising funds for the club

CASCs are only required to apply to HMRC and not a charity regulator; they must complete a CASC application form

See: HMRC: How to complete Form CASC(A1) Community Amateur Sports Club Registration

• Club's governing documents - such as prospectus, constitution, rules, or articles of association
• The club's latest accounts

The form should be returned to: HMRC Charities, CASC Unit, St Johns House, Merton Road, Liverpool L75 1BB

The main purpose of a CASC is to provide facilities for eligible sports, and to encourage people to take part in them.

To qualify as a CASC the club must be:

• Formerly constituted
• Organised on an amateur basis
• Not for profit, and prohibited from distributing profits other than to a charity or a CASC
• Open to the whole community
• Set up and provide its facilities in an eligible area
• Managed by fit and proper persons

Benefits to members may include:

• Use of the sporting facilities and equipment along with suitable coaching
• Medical treatment and insurance cover
• Some reasonable costs for travelling to away matches
• Some reasonable post match refreshments
• Sale of refreshments such as food and drink

Providing that it contracts on an arms' length basis it may:

• Buy goods or services from members
• Employ and pay staff who are also members

CASCs and members' bars

Many CASCs run a bar in their club houses. Charities and CASCs are permitted to engage in some low level trading activities and these activities are exempt from tax proving that certain qualifying conditions are met. These are set out in Section 46 Finance Act 2000. In summary:

Providing that a trading activity is permitted by the CASC's or charity's constitution, it is not the club's primary activity and profits must be applied solely for the use of the charity, trading is permitted if the following limits are not exceeded:

• A maximum trading income of up to £5,000 per year, or
• No greater than 25 per cent of the charity's total gross income in the period, if that income is between £20,000 and £200,000, or
• No greater than £50,000, if that income exceeds £200,000.

Step 3: authorising a tax agent

Use of a tax agent is optional. A charity or CASC may authorise a tax agent to act on its behalf by completing HMRC:form 64-8.

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Having obtained a registration number from HMRC, a charity is able to reclaim tax from HMRC under Gift Aid.

In order to make a tax repayment claim a charity is required to:

• Retain and record Gift Aid declarations
• Complete a tax refund form R68(i)

HMRC operates a "check later" approach: a charity claiming a tax repayment under Gift Aid is subject to random checking by HMRC, see:

• Audit by HMRC

Retain and record Gift Aid declarations

• A donation under the Gift Aid scheme must be accompanied by a Gift Aid Declaration.
• A charity is required to keep sufficient records in order to identify donation receipts together with Gift Aid donors and their declarations.
• From 2012/13 the Government has announced that charities may claim Gift Aid on collections of up to £5,000 per year comprising of small donations of up to £10 without obtaining a Gift Aid declaration. Detailed rules on this proposal are awaited.

The Gift Aid declaration

The individual must give a declaration within four years of making a gift.

It can be made:

• Orally or
• In writing.

One declaration may cover one or a series of gifts.

It is vital for the charity's tax compliance that it retains complete records of donations received.

Oral donations

A charity may receive donations by telephone. It is required to keep a record by audio recording or in writing of:

• The donor's: name: initial and surname, his address: house number/name and postcode
• The date of the declaration and written record

The charity should explain to the donor that:

• He must have paid sufficient Income Tax or Capital Gains Tax in order to cover the grossed up amount of the donation made;
• He has a right to cancel the donation within 30 days.

The charity should offer to send a copy of its written record to the donor, if he requires a copy for his records.

Written declarations

A written declaration must include:

• The donor's: name: initial and surname, his address: house number/name and postcode
• The name of the charity with its trading name and logo, to identify the charity “without doubt”
• Identify the gift or gifts to which the declaration relates
• Confirm that the identified gifts are to be treated as Gift Aid donations.
• It must explain that the donor must pay sufficient Income Tax or Capital Gains Tax in order to cover the grossed up amount of the donation made.

Identifying the gift or gift

There is no wording set in the legislation, so charities can chose. These are some commonly used descriptions:

• The donation of £[amount] that I make to you on [day/date]
• All donations that I make to you under direct debit commencing on [date]
• All donations I make from this date [date] and until further notice.
• All donations I have made since [date] and all donations I make hereafter.

Templates: HMRC provides:

A Gift Aid Declaration template

A Gift Aid sponsorship and Gift Aid declaration form

Reclaiming tax from HMRC: form R68(i)

• A charity must use form R68(i) to reclaim tax on qualifying donations. This can only be completed online.
• Repayment claims must be made within four years of the end of the accounting period or tax year to which they relate.
• The charity is required to list each donor together with the amount of each donation received.

The limits are:

• Each individual donation within the aggregated amount must not be more than £10.
• The aggregated amount on each line on the R68 schedule cannot exceed £500.

The entries on the schedule must be sensible descriptive labels that will enable the Charity or CASC to find the relevant Gift Aid declarations and audit trail information that support the amounts listed on the schedule.

The adding together of small donations cannot be applied to:

• Donations larger than £10
• Collections where there are no Gift Aid declarations
• Donations associated with admissions to charity visitor attractions
• The arrangements for sponsored events (above).

Audit by HMRC

HMRC selects charities and CASCs for audit using a risk-based and random selection.

The charity's trustees are responsible for ensuring that claims made under Gift Aid are accurate. and that sufficient records are retained for audit purposes.

See HMRC: charity audits

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New measures for Gift Aid announced in 2011

Pro bono work and professional indemnity insurance

• Advisers should always check their professional indemnity insurance policy wording before undertaking voluntary work.
• Work of a professional nature should be undertaken only if an adviser has the commensurate skills and competence.
• Employers should ensure that they have a policy in place to allow employees to undertake pro bono work.

Direct tax references

Gift Aid Relief: Section 413 to 430, Chapter 2, Part 8 Income Tax Act 2007

Donations to charity by individuals (appropriate declarations) regulations 2000/2074

Links

HMRC's charities pages: http://www.hmrc.gov.uk/charities

For HMRC's guidance on specific topics see: http://www.hmrc.gov.uk/charities/gift_aid/rules/index.htm

Templates: HMRC provides:

• A Gift Aid Declaration template
• A Gift Aid sponsorship and Gift Aid declaration form

HMRC help sheets for charities:

1. What is Gift Aid?
2. What is a Gift Aid declaration?
3. What can I claim Gift Aid on?
4. What is a benefit for Gift Aid purposes?
5. Do I need to keep records of Gift Aid donations?
6. Is my charity a trust or a company?
7. Community Amateur Sports Clubs
8. How do I run a sponsored event and claim Gift Aid?
9. How do I claim Gift Aid and how often can I claim?
10. How should I list donations on the schedule?
11. What are the time limits for claiming Gift Aid?
12. What happens if my charity is selected for a Gift Aid audit?

CASCs

HMRC provides a list of registered CASCS here: http://www.hmrc.gov.uk/casc/clubs.htm