In times of austerity and with recent cut backs in core funding within the charity sector, fundraising and donation giving has become vitally important to charities and community amateur sports clubs (CASC) to ensure that they can continue to fund their charitable activities and to provide those vital services to the general public which only the third sector delivers.
New and innovative ways for the corporate sector to support local charities are being introduced with newly formed business partnerships such as the establishment of ‘charity of the year’ within firms, leading to one off corporate donations being very much a thing of the past.
Armstrong Watson has become a business partner to a number of local charities and holds a wide range fundraising events during the year to raise money for individual charities. Our fundraising events are supported by members of staff, and include coffee mornings, Christmas jumper days, sponsored achievements and regular dress down days, with all money collected being eligible for Gift Aid, as the individual contributions are provided by UK taxpayers.
Gift Aid means the value of these donations received can be increased by 25%; meaning that the administrative time and effort needed to reclaim the tax on these donations is money well spent.
HMRC currently have two Gift Aid schemes in operation – Gift Aid and the Gift Aid Small Donations Scheme (GASDS);
Gift Aid
The general Gift Aid scheme requires charities and CASC to maintain records which substantiate the claim being made with the following information
The amount of each donation received
Name, address and postcode of each donor
When the donation was made
A Gift Aid declaration from the donor
These records should be kept for a period of six years after the end of the accounting period to which the claim relates.
Gift Aid Small Donations Scheme
In April 2013 HMRC introduced a new scheme for qualifying charities and CASC where Gift Aid could be claimed on cash donations of £20 or less for donations received on or after 6 April 2013
Top-up payments on up to £5,000 of small cash donations received in any given tax year can be claimed resulting in an additional £1,250 being receivable. The top-up payments claimable under GASDS is dependent upon the amount claimable under Gift Aid. For example, for every £1 of Gift Aid donations then a claim of £10 of GASDS donations can be claimed up to the maximum limit.
The benefit of this scheme is that payments under GASDS are not a tax relief and hence there is no audit trail needed back to the original donor’s tax record and hence no Gift Aid declaration is required. This is therefore a very good scheme for bucket collections, coffee morning proceeds and small general collections.
HMRC Online Charities Repayment Service is the quickest and easiest way to claim your Gift Aid. Charities can claim as frequently as they like providing each individual claim is at least £100. Ideally a claim should be made annually in line with the annual accounts production, not only for simplicity but also to aid the charity’s cashflow and to ensure that the timing of donations do not expire outwith the Gift Aid claim period.
The benefit of Gift Aid to a charity or CASC far outweigh any administrative costs incurred. If you would like any further information about how to register, whether your charity/CASC is eligible, what donations are covered by Gift Aid and the best methods to claim, then please contact Karen Rae or Joanna Gray, our charity specialists.
