Through Gift Aid churches can claim tax back from donations made by UK taxpayers and thereby increase their income, but only with permission from the taxpayer.
As a Diocese there is more we can we do to maximise our Gift Aid receipts.
- To claim Gift Aid an individual must be a UK taxpayer and have paid sufficient tax to cover the claim. The tax may have been paid at the basic rate or lower rates or it may have been paid in the form of Capital Gains Tax. Other taxes such as Council Tax and VAT do not qualify.
- Donations left to a charity in a Will cannot be Gift Aided. However any interest (with tax deducted) which may accrue to the Estate before the donation is paid can be claimed back.
- Volunteer’s expenses can be paid and then given back as a Gift Aided donation, provided they are treated as two separate transactions and not simply a double entry bookkeeping exercise.
- For audit purposes the Gift Aid declaration must be kept for 6 years and must contain the name of the charity and donor, the donor’s address, description of payment, a declaration that payments are Gift Aided. There should also be a note explaining that the individual must have paid sufficient UK income or capital gains tax to cover the claim. For more details, please refer to the Gift Aid section of the Parish Resources Website.
- For regular givers with Gift Aid declarations on file, churches need only keep a 1 month sample of Gift Aid envelopes for each tax year.
Gift Aid Small Donations Scheme (GASDS)
The Gift Aid Small Donations Scheme (GASDS) came into effect at the beginning of the 2013/14 tax year and is separate to the standard gift aid scheme.
It is not therefore a direct replacement, but should be used alongside the Gift Aid/Envelopes Scheme to enable parishes to claim relief on loose cash donations that would not have been possible under the existing Gift Aid system.
Previously, parishes could only claim through this scheme using the Community Buildings element. However, in October 2015, it was announced that parishes are eligible to use the top-up element of the scheme.
This can be advantageous either for single church parishes or parishes with multiple buildings who will receive less than £8,000 (£5,000 for periods before April 2016 to March 2017) in small donations in any given tax year.
Unlike the Gift Aid Scheme, GASDS only has a two year time limit for claims. Therefore, please ensure that any claims in relation to the period 6th April 2017 to 5th April 2018 are made before the 5th April 2020.
For more detailed information on how to operate either element of the scheme, please refer to the Parish Resources website at this link.
When church buildings re-open, after COVID-19 lockdown, if they receive higher than normal donations, there’s a way that these could still qualify for GASDS if it’s clear that they relate to gifts that would have been given on separate occasions had the church been open. For more information on this, please refer to this link.
Claiming Gift Aid Online
From 2013, HMRC changed the method to claim gift aid to an online system. The Parish Resources website has produced a step-by-step guide which walks you through the full process on how to register, firstly through the Government Gateway and then link this to HMRC in order to submit your claims electronically.
More information on how to claim can also be found at this page on the Parish Resources website.
Related links
If you have any questions on Gift Aid or would like to explore how to maximise Gift Aid in your parish further, please contact James South on 01603 882347 or Susan Bunting on 01603 882377.