Understanding the benefits of Gift Aid

Gift Aid is a Government scheme that allows charities and Community Amateur Sports Clubs (CASCs) that are registered with HMRC to claim an additional 25p for every £1 donated, at no additional cost to the donor, providing certain conditions are met.

To qualify for Gift Aid, donations must be made from individuals who have paid the same amount or more in Income Tax or Capital Gains Tax in that tax year and have also completed a Gift Aid Declaration form that gives the Charity permission to claim.

There are some exclusions in relation to claiming Gift Aid on funds generated from sponsored events, donated goods, and charity auctions and Charities need to know whether or not Gift Aid can be claimed on donations received from fundraising events, as discussed in our previous article.

Whilst Gift Aid generates an additional £1.3bn in valuable funds, there is much more that remains unclaimed. Charities are being encouraged to review and evaluate the added administration required to enable them to make a claim versus the value of the additional funds available, and actively promote the benefits of Gift Aid to their donors.

Charities should not overlook cash donations received where Gift Aid Declarations have not been completed. Once a charity is registered for Gift Aid and is making claims, Gift Aid can be claimed in relation to cash donations (maximum of £30 limit per donation) by the charity under the Gift Aid Small Donations Scheme.

For further support with Gift Aid and help understanding Gift Aid Collection, please contact a member of our EQ Charities team via charities@eqaccountants.co.uk or contact one of our offices.