Q & A – Gift Aid

What is gift aid?

Gift aid enables a club to get a tax rebate of £25 for every £100 donated by an individual who pays UK income or capital gains tax.

Who qualifies for gift aid?

Only clubs registered as CASC's or charities qualify for gift aid tax rebates on individual donations. The donor must pay sufficient tax to cover all gift aid tax rebates on his/her donations made in the tax year.

What qualifies for gift aid?

Gifts of money with no or token benefits given in return to the donor qualify not gifts of goods or services. Membership subscriptions to a CASC do not qualify.

What examples are there of cases where gift aid can be claimed?

Donations in support of a project e.g. a new clubhouse qualify. Sponsored walks, swims , runs and other activities can also qualify. Instead of gifts for a birthday or anniversary party qualifying donations could be requested to the individual's nominated CASC.

What about volunteer expenses not charged?

Volunteer expenses incurred for the benefit of a CASC and not charged to it by the volunteer do not qualify for gift aid. These could be charged to the CASC by each volunteer and donations made back to the CASC generating tax rebates of 25% of the amounts charged. Please see the Annex below for a step by step guide.

What are the processes for claiming gift aid?

Donors must complete a gift aid declaration and provide this to the club for record keeping purposes.These must be available for HMRC's inspection if requested. Please see here for the link to the declaration forms. Tax repayment claims are usually made on line after the CASC registers for HMRC's online services and are paid promptly. HMRC periodically audit gift aid claims.

Can a CASC use an Online Giving Provider to claim Gift Aid?

Online Giving Providers, for example BT MyDonate, Virgin Money and JustGiving (amongst others) allow your members and supporters to give online by setting up a Fundraising page in order to collect your donations in a simple and easy to manage way. It costs you absolutely nothing but different Providers charge varying fees. The websites are set up to manage Gift Aid on donations. The Provider does all the work to enable you to receive tax refunds from HMRC who will check the Provider’s Gift Aid procedures rather than yours.

Setting up an Online Giving page for your CASC will allow you to communicate why you are fundraising and it will give all of your members a simple way to make donations. You will also be given helpful tips on the best way to tell people about your page.

Are there any other benefits of gift aid?

Higher and additional rate taxpayers can receive tax rebates as well e.g. a 40% taxpayer can get a 25% tax rebate on his or her donations to a CASC. Regular annual gift aid claims by a CASC will enable it to use the Gift Aid Small Donations Scheme (GASDS) under which HMRC will make a payment of 25% of any small qualifying cash donations of £20 or less from individuals e.g. from "bucket" collections.

Where can I get more information on gift aid?

Please see here or HMRC guidance for further information. Alternatively please contact us here.

   Annex - Gift Aid for CASC’s and Volunteer Expenses - Step by Step Guide

     Background:

  1. CASC’s may reimburse expenses which are proper, reasonable and evidenced to volunteers who assist them.
  2. Where a volunteer foregoes the expenses to which he or she is entitled this “gift” does not qualify for gift aid.
  3. There is however an alternative approach for volunteers who are UK taxpayers.
  4. The expenses can be reimbursed by the CASC to the volunteer who then may make a donation to the CASC qualifying for gift aid.
  5. This will mean that the CASC can claim a repayment from HMRC which currently amounts to 25p for every £1 given.

     Steps to be taken:

    1. The club’s rules should provide for the reimbursement of expenses (such as travel ,printing, communications , copying etc) properly incurred by volunteers in carrying out their voluntary work for the club (1).
    2. The volunteers should make a claim for reimbursement of any reasonable expenses incurred on a claim form supported by appropriate invoices, receipts etc which is then approved by the club secretary or treasurer (2).
    3. The volunteer should be paid the expenses to which he or she is entitled by the club (on at least one occasion the payment should be made by cheque rather than cash).
    4. The volunteer is then in a position to keep the money or pay all or part of it back by way of a donation to the club under gift aid. The latter will involve the completion of a gift aid declaration.
    5. The CASC should complete gift aid documentation in accordance with normal procedures and submit a gift aid repayment claim to HMRC.
    6. The club should keep appropriate records to show what it has done.
    7. This is only suitable for volunteers who have themselves paid at least as much UK tax as the amount due on the grossed up donation and all other qualifying donations in the tax year (3).

     Notes:

  1. The approach is directed principally at volunteers for their voluntary work for the club e.g. as a coach, not generally for expenses incurred by members playing for the club.
  2. The reimbursement of reasonable expenses in this way where there is no salary or fee paid to the volunteer should not treat him or her as an employee for PAYE etc.
  3. The other rules of the gift aid scheme must of course be met such as the limit on the value of any benefits given to the volunteer in return for the donation.