Gift aid is tax relief on money donated to UK charities. HMRC treats donations as if the donor has already deducted basic rate tax from them. The charity can then reclaim this tax to increase the value of a donation.
For instance, if a donor gift aids their donation, the charity will receive an additional 28p for every pound the donor gives. The charity can claim gift aid of 25p on every pound and from 6 April 2008 until 5 April 2011 HMRC is also operating transitional provisions for gift aid donations made, paying a government supplement of 3p on every gift aided pound.
Gift Aid was originally introduced in the Finance Act 1990, but was originally limited to cash gifts of £600 or more. The policy was substantially revised in 6 April 2000, when the minimum donation limit was removed. A similar policy applies to charitable donations by companies that are subject to UK corporation tax.
Gift Aid was originally intended for cash donations only. Since 2006 however, HMRC has allowed tax on the income earned by charity shops acting as agent for the donor to be reclaimed, although to operate effectively, the charity needs HMRC-approved systems to be able to record and track the progress of each item from receipt to sale, and confirm with the donor that the donation should still go ahead.
Charity campaigners are calling for an opt-out form of gift aid rather than the current opt-in.
PTA-UK has joined with MyDonate to enable every Parent Teacher Association in England, Wales and Northern Ireland to raise sponsorship money and collect gift aid online.
The amount of money reclaimed in gift aid by Sue Ryder from goods donated to its charity shops has now topped £10m, the charity has announced.
Cancer Research UK will install a cloud-based electronic point-of-sale scheme to enable it to claim gift aid in its shops, in a bid to raise £18m over the next five years.
The Payments Council, recently admonished by the Treasury Select Committee over its failed attempt to scrap cheques, has launched a campaign to educate consumers about the different payment methods available to them.
HMRC has said that Roman Catholic mass offerings are eligible for gift aid along certain caveats.
The National Trust has doubled gift aid revenue in eight of its properties by introducing specialist EPoS systems.
The British public has the capacity to give more, but there is no consensus as to whether and what tax incentives can encourage more philanthropy, it was evident at a meeting of sector representatives in Westminster yesterday.
A survey into the financial management of 64 charities with an annual income over £1m has found that those charities have reduced their ethical and socially responsible investments from one-third to one-fifth.
HM Revenue and Customs has revealed that it has had no complaints about the fit and proper persons test since it was introduced a year ago.
The total value of charitable tax reliefs provided by HMRC rose to £3.34bn in 2010-11, according to latest figures.
In light of the recent Catholic Care appeal decision, Robert Ashton asks if donors would rather their money went in pockets of barristers or towards helping gay couples to adopt a child.
HMRC has announced the launch of its new gift aid forms which will replace the forms on the 2009 Gift Aid Toolkit CD and prior internet forms.
The Scotland Bill and gift aid
The Scotland Bill, which is presently making its way through Westminster, has implications for UK charities receiving gift aid donations from Scottish donors, warns Turcan Connell.
The scrapping of Self Assessment Donate, the mechanism for giving income tax repayments to charity via the tax return, which was announced in Wednesday’s Budget but not given much attention, will see the sector lose around £400,000 a year.
Changes to gift aid, inheritance tax and mileage rates have been welcomed by sector leaders after a Budget announcement hailed as the “best Budget for charities in years”.
Charities will no longer have to obtain signed gift aid declarations on the first £5,000 of small donations per year in order for those donations to qualify for the tax relief, Chancellor George Osborne announced in his Budget speech today.
The Philanthropy Review has called on the government to reform gift aid guidelines to allow charities to claim gift aid on small cash gifts, advising such a reform could bolster charities’ collective coffers by £175m a year.
Peter Lennard recounts the horror of an HMRC gift aid inspection and offers some tips on how not to get caught out.
The Charity Commission has cleared the Politics and Economic Research Trust following allegations published in the Guardian that it was used as a vehicle to channel funds enhanced with gift aid to the Taxpayers Alliance.
The National Council for Voluntary Organisations has launched a seven-point action plan aimed at saving the Big Society concept in the face of "bad press".
What's new in charity audit
Don Bawtree provides an update on Practice Note 11.
Life for a small charity - jack and master of all trades
Think you've got it tough out there? Try being a charity with less than £1m income, says Cath Lee.
The Association of Charitable Foundations plans to oppose the suggestion contained in the Giving Green Paper that foundations should make a minimum annual payout in order to boost the sums flowing to charities.
HRMC will investigate the benefits and cost of allowing online gift aid filing, but will not be funding any gift aid database, the Economic Secretary to the Treasury has stated.
Charity umbrella bodies have been left surprised and disappointed by the government's sudden closure of the Gift Aid Forum.
The chief executive of a small international development charity has called on the government to scrap its international aid budgets, launching an attack against ‘Big Aid’.
Charities could find new opportunities for donors among higher rate tax-paying families not wanting to lose their child benefit under the government’s new plans for state benefits, according to professor of charity studies Gareth Morgan.
The government is under pressure from a consortium of sector bodies to implement gift aid reforms before the next Budget, with a new letter to the Treasury emphasising the need to move more processes online.
Double dip problem
A recent finding of the First Tier Tribunal Tax is a reminder of the danger for charities of gifts made by way of so-called ‘double dip’ arrangements, where both inheritance tax relief and gift aid are claimed on the gift.
The cost of processing gift aid claims to HMRC has risen by more than half over the course of this year, it was revealed during parliamentary questions yesterday.
