Knowledge Hub

Written by:

Louise Veragoo

Article read time:

2 minutes

Louise leads haysmacintyre's NFP corporate tax team and has specialised in the sector for more than 20 years. She provides tax advisory and compliance services, including creative sector tax reliefs, Gift Aid, group tax planning, international matters and the application of corporation tax charitable reliefs. Prior to joining haysmacintyre in 2016, Louise worked as a senior tax manager at a top five accountancy firm, specialising in the NFP sector.

Tax and VAT Risk Gift Aid

5 October 2023, 10:26

Gift Aid: avoiding common pitfalls

Claiming Gift Aid doesn't have to be a headache. Louise Veragoo from Haysmacintyre looks the common pitfalls and opportunities for getting the most out of your charity’s Gift Aid claim.

Below are some of the ways charities can avoid the pitfalls seen in claiming Gift Aid and the ways you can maximise the value of every donation.

1. Invest in training and skilled staff

Gift Aid is complex and it is worth investing time and resources in correct training and awareness for your staff and volunteers. Give it the attention it deserves. There are plenty of free courses available, and CFG members can benefit from access to free expert advice and peer support.

2. Produce a complete audit trail

HMRC are increasingly interrogating claims and expects a charity to be able to document the path of a donation, including linking the donor to a valid Gift Aid declaration.

3. Stay up-to-date

Gift Aid and tax legislation is always changing, so make sure you're on top of the latest changes. These include:

Clarification of the availability to claim Gift Aid on waived refunds and loan repayments by individuals in certain circumstances
Reduced administration for end-of-year letters for Retail Gift Aid, where the sales proceeds raised are less than £20 p.a.
Increases in value thresholds for benefits received as a consequence of the donation
Simplification of the Gift Aid Small Donations Scheme (GASDS), making it easier for charities to access
HMRC guidance now suggests that the Gift Aid declaration should include the donor’s full name, rather than just initials

Opportunities

Where your charity has cancelled ticketed events or other fee-paying activities and the donor has indicated that they would like to donate the refund to your charity, you should now be able to claim Gift Aid on these amounts.
You will need to hold a valid Gift Aid declaration for the individual and meet the other usual requirements for Gift Aid in order to make the claim. Individual donors waiving the right to a repayment of a loan made to your charity may also now attract Gift Aid, subject to certain conditions.

Remember that some items 'given' by your charity to your donors do not count as a benefit for the purpose of calculating the benefits limits. These relate to items given as a consequence of a donation, ie a 'thank you'. One such item is naming rights, which can be very useful for your more generous donors as a way of saying thank you without jeopardising the availability of Gift Aid.

If your charity has not yet claimed for Gift Aid or is behind with claims, do not delay, get your claim in as soon as possible. Time limits for claims are:

Trusts: four years from 5 April in which the donation was received
Corporates: four years from the end of the accounting period in which the donation was received
GASDS: two years

Follow up with donors where you believe there to be missing or unclear information from their Gift Aid declaration. If you think there is an opportunity to claim Gift Aid, then take the initiative and make contact with your donors.
Take care not to exclude donations where the donor has an unusual address. Claims can still be made for donors living in care homes, houseboats and pubs. For example, HMRC does not expect you to investigate every donor’s address details; if it looks reasonable, make a claim.

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Knowledge Hub

Louise Veragoo

2 minutes

Gift Aid: avoiding common pitfalls

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