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HMRC advises runners to collect sponsorship early

Fundraising | Gemma Ware | 1 Mar 2008

HMRC has advised charities to tell supporters running the marathon this year to collect as much sponsorship money as possible before 5 April, in order to qualify for 28p and not 25p of gift aid.  

Changes being introduced to the basic rate of income tax mean any donation received by a charity after 5 April will be gift aided at the lower rate. But HMRC has confirmed that donations qualify for gift aid at the point at which they are paid to a charity, or to a person acting as an agent of the charity, such as a marathon runner.

The date of the pledge is irrelevant, meaning a runner who did not start collecting money until after the London race on 13 April would lose 3p of gift aid on every £1 of their sponsorship.

“If any sponsors actually pay their qualifying donations to the runner, who is acting as the charity’s agent, on or before 5th April, gift aid will apply at 28p in the pound, providing such sponsorship payments are not conditional upon completion of the event, i.e. not refundable if the event it not completed,” a spokesman said.

Andy Jones, senior manager at HMC’s charity team, speaking at the CHASE conference on 27  February, admitted there would be widespread confusion for small charities dealing with the two rates of gift aid this year.

“My concern is that with a large voluntary workforce never having to deal with this before it is going to make for more complexity having to make two calculations. Confused? You will be,” he said.

He used the example of how a charity that cashed a cheque on Friday 4 April that did not clear until Monday 7 April, would qualify for the lower rate of gift aid. Overall, the sector is predicted to lose £70m.

However, Jones said HMRC would not be looking too closely at claims spanning the tax changes. “What we are looking for is somebody trying to claim 28 per cent in November 2008 saying ‘we didn’t know it had changed’.”

Jones was speaking ahead of expected changes to gift aid to be announced in the budget on 12 March following a government consultation with the sector. He said HMRC was “awaiting as eagerly as anybody else” what the full extent of the changes would be, but said work was still going on behind the scenes with staff being told by ministers to “be more imaginative”. See news story Self-assessment donations fall since launch year

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Directory: HM Revenue & Customs (HMRC)
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