Voluntary Sector Support Guidance

Gift Aid and tax-effective giving

Gift Aid is a tax relief allowing charities in the UK to claim back an extra 25% in tax on every eligible donation made by a UK taxpayer.

That’s an additional 25p for every £1 donated so it is not insignificant. Claiming Gift Aid on donations is a good way to support your organisation’s fundraising. In order to claim Gift Aid your organisation must be a registered charity or Community and Amateur Sports Club (CASC).

How Gift Aid works

The process is fairly simple, but before Gift Aid can be collected there are two eligibility criteria donors must be made aware of:

  1. The donor must have paid at least as much income tax or capital gains tax that financial year as the donation.
  2. The donor must complete a declaration that gives the organisation permission to claim it.

Subject to the eligibility criteria being met, a gift aid declaration form needs to be completed by the person making the donation to the organisation. There are different ways of doing this depending on how the donation is being made. For example, if someone is doing a sponsored event for the organisation, collecting sponsorship from multiple parties, they would use the template available on GOV.UK. A one off donation however would need a different declaration completed by the individual donor.

Follow the below links to find out more.

Claiming on smaller donations without a declaration form

If the donor hasn’t made a declaration you may still be able to claim on cash donations of £20 or less. This is known as the Gift Aid Small Donations Scheme or GASDS

Rules for particular payments

When considering Gift Aid, you must be aware that there are some payments that have special rules attached. These include:

  • funds from sponsored challenges, for example overseas treks or marathons
  • charity membership fees
  • church collections
  • selling goods on behalf of individuals, for example through a charity shop
  • charity events or to view charity property
  • charity auctions
  • volunteer expenses donated back to your charity or CASC
  • funds raised through charities involved in running schools.

There are some payments that don’t qualify. These include payments:

  • from Limited Companies
  • made through Payroll Giving
  • that are a payment for goods or services or made because your charity or CASC bought goods and services
  • that started as loans, but no longer need to be repaid
  • where the donor gets a ‘benefit’ over a certain limit
  • of shares
  • from charity cards or vouchers, for example Charities Aid Foundation (CAF) vouchers
  • of membership fees to CASCs
  • you received before becoming a recognised charity or CASC.

How to claim Gift Aid

Once the declaration has been taken care of, an organisation can claim Gift Aid on a donation using HMRC Charities Online. You need to be registered to use this facility.

Further information