Gift Aid

For oral declarations, the charity should obtain the same details as those required for a written declaration and explain to the donor that they must have paid sufficient tax. The charity must either keep a recording of the conversation, or send the donor written confirmation (by post, email) However NeST does not advocate this method preferring a written form of declaration. 

The charity must keep a record, or copy of this written confirmation, HMRC will accept this can comprise a template mail merge letter together with a record of the donor details entered into the letter and the date the letter was sent. The charity may not reclaim the Gift Aid until the statement is sent.

Please note that sadly funds raised from general fundraising events do not quality as they are not individual, or corporate. For instance such as coffee mornings, or charity collection boxes where many people contribute, or similar. Donors should keep a very simple record of Gift Aid donations made. 

Small NeST logo ‘Gift Aid envelopes complete with declaration for events are available from Wendy if you ask.

An individual donor must provide the charity with a declaration that their donation is made under Gift Aid. This declaration can be provided at the time of the donation, in advance of the donation, or, within certain time limits, after the donation was made. A donor can provide a declaration in writing (including by email, text message or by completing a website form), special NeST gift Aid envelope, or orally (usually over the telephone).

Individuals can also authorize an intermediary to make a Gift Aid declaration to one or more charities on their behalf. The authorization lasts until the end of the tax year, at which point it must be renewed. Written declarations should include:

The donor’s full name
The donor’s home address
The identity of the beneficiary charity -  Nephrotic Syndrome Trust  

Identification of the gift(s) to which the declaration relates and confirmation that Gift Aid should apply.

Tax to cover statement
The donor must also have been made aware that they need to have paid sufficient income tax and/or capital gains tax to cover the Gift Aid and that if there is a shortfall they will be held liable HMRC.

A higher or additional rate tax payer, and in Scotland, an intermediate rate payer, can claim income tax relief on their donation and, if desired, carry this relief back to the previous tax year. In effect, the grossed up value of the donation is removed from the donor’s highest rate income pot and placed in their basic rate income pot.

Charities are not expected to police this and it is for the donor to declare to each charity HMRC can demand repayment.

A Gift Aid donation from an individual is assumed to be paid net of basic rate income tax. The charity can reclaim this tax from HMRC provided the donor has paid an equivalent amount of UK income tax and/or capital gains tax. Please note this, or you may have to repay HMRC.

For donations from individuals, charities can reclaim the basic rate income tax the individual has paid on the donation, providing the individual provides the charity with a Gift Aid declaration. This boosts the value of the donation to the charity by 25% (assuming the basic rate of income tax is 20%). It’s like FREE money.

However from April 2019 the benefit threshold for the first £100 of the donation will remain at 25% of that amount. Charities can offer an additional benefit of 5% to donors on the amount of the donation that exceeds £100 – so 25% + an extra 5%.

The total value of the benefit that a donor can receive remains at £2,500.

However, there are some rules to follow and the charities are subject to inspection by HM Revenue & Customs (HMRC) to ensure compliance. Individual Gift Aid is only available for monetary donations. Donations of other assets and gifts in kind do not qualify for Gift Aid, though the Retail Gift Aid Scheme is an HMRC approved way of obtaining Gift Aid on donated goods. Donations made in foreign currencies must be translated at the rate applicable on the date of the donation and there is no need to net off exchange costs.  

For donating companies, the method of obtaining the tax relief is very simple – the company deducts the donation from its taxable profits before calculating its tax liability. The donation is thus made gross of tax and the charity does not claim back any tax from HMRC. There is no need for the company to provide the charity with a Gift Aid declaration, although other rules do apply, such as the donor benefit rules.