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.
JustGiving claims it has not yet been affected by Virgin’s fundraising platform, as recent figures for the upcoming London Marathon show sign-ups steady and a rise in donations.
There needs to be more thought around the proposed changes to gift aid. Adrian Beney talks about what's wrong with the composite rate
The Institute for Fundraising has called on the government and opposition parties to commit to promoting fundraising in their upcoming election manifestos through a three-point action plan.
There will be no move on gift aid before the general election, a government minister told sector leaders in a meeting early this week.
A Conservative government would focus on increasing giving rates, rather than gift aid reform, to boost voluntary income to charities, the shadow charities minister said yesterday.
An extra £50m would be earned by the top 100 charities alone if a flat 37p-per-pound gift aid rate was introduced, estimates the British Red Cross.
The Institute of Fundraising fears that gift aid reforms mooted in yesterday’s government report could be “complete non-starters” as chief executive Lindsay Boswell reiterates concerns there will be no action on gift aid before the general election.
Government research into possible reform of gift aid has concluded that higher rate tax payers are unlikely to be massively deterred by tax reform, and appears to favour the introduction of a 37p-per-£1 gift aid rebate directly to charity for all donations.
Gareth Jones hears how the North London Collegiate School increased its gift aid revenue by 50 per cent, and how educational bodies are not making the most of their fundraising potential.
The government will commit no more than £75m from dormant bank accounts as initial capital for a Social Investment Wholesale Bank, it announced today in its Pre-Budget Report.
Angela Smith did not deny that the government was considering scrapping gift aid relief for higher-rate taxpayers after being challenged about it by her Conservative counterpart Nick Hurd in a Commons debate last week. She also blamed the lack of progress on changes to the gift aid system on charities, saying there was no consensus in the sector about the best way forward.
Justgiving more than doubled its pre-tax profits to £1.39m in 2008, and its chief executive Zarine Kharas earned a basic salary of £141,667 plus £32,327 from an employee profit-share scheme. Although its four directors - chief executive Zarine Kharas, managing director Anne-Marie Huby, John Huysmans and Bela Hatvany – still did not recommend paying a dividend, they collected salaries totalling £428,286, new accounts show.
Several charity chief executives and fundraising directors have signed the Institute of Fundraising’s online petition for the government to make changes to gift aid, but the petition is still short of the number needed to elicit a response from government. The Institute wants the government to allow charities to reclaim the gift aid that higher-rate taxpayers are able to reclaim for themselves but often don’t.
Higher rate tax payers should automatically receive full tax relief according to the Institute of Fundraising, which today renews calls for reform The Institute has delivered a proposal to the Treasury calling for it to consolidate the donation tax relief for higher rate taxpayers into one process, potentially increasing values by two thirds.
Individual giving to arts has more than doubled in the last eight years, but still has great growth potential, according to a new report. Low and medium-level donations by individuals to arts organisations has increased by 128 per cent since 2000-1, according to a study conducted by City University London for Arts & Business. The report, titled ‘Local Pride - Individual giving to the arts in England’ found that most donors who gave up to £1,000 a year to an organisation had visited that organisation’s venue around three times a year.
Changes to the way Charities Aid Foundation processes direct debits has left charities without information about their direct debit donors and prompted at least one charity customer to leave the organisation. Since March, instead of assigning reference numbers to each gift or direct debit order as before, CAF now creates unique and constant reference for individual donors in an effort to simplify the process. But some charities have told PF the changes have left them without critical information on direct debit sign-ups and cancellations.
I’m starting to think that the recession is actually good for charities. A decade of growth has left us fat and unfocussed. Now everyone is taking a long hard look at how they use their time and re-rationalising what is effective. I say everyone, but maybe not at sector level. The sector’s “key umbrella bodies” are using their (our?) time to build a case for the government to change the rules on gift aid. Numerous reports have shown that charities are just not maximising their use of the current gift aid system.
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The push to reform gift aid into an opt-out system has gathered steam as the sector's umbrella bodies start mining their own members for evidence to lobby Treasury. A consortium of the sector’s leading umbrella organisations have begun a coordinated survey of their members to uncover the attitudes of charities towards changing the gift aid system to an opt-out one, wherein donors would be assumed to consent to having gift aid added to their donation. Acevo, the Charity Finance Directors’ Group, Charity Tax Group, Institute of Fundraising, Charities Aid Foundation and NCVO have banded together to get their members to participate in an online survey about the tax-efficient giving mechanism. Results from the survey will be used by the consortium to push HMRC and Treasury to reform gift aid. The sector made some progress in February this year when the Treasury agreed to review the rules governing gift aid ahead of the 2010 Budget so as to help charities survive the recession.
Neither of the two charities formerly headed up by Louise Richards, the Institute of Fundraising's new director of policy and campaigns, were members of the Institute under her leadership. While Richards (pictured), has substantial experience in charities, Professional Fundraising has discovered that she has had minimal contact with the Institute prior to her being appointed a member of its senior management team. Richards has held chief executive positions at War on Want and Computer Aid International, both of which are not organisational members of the Institute. She told PF that one of the reasons that those organisations were not part of the Institute was because they were not aware of “the benefits membership can bring them”.
From next year charities will have just four years to reclaim gift aid, after HM Revenue and Customs confirmed that it will be reducing the deadline from the current six years. To be introduced from 1 April 2010, HMRC says the changes are to harmonise the various compliance checking and penalty charging powers it inherited when formed in 2005, rather than to target charities. “These multiple systems were inconsistent and confusing for our customers,” explained a spokesman. “In order to provide the new department and its customers with a single modern practice across all taxes a review of powers was set up.”
Five million more people could be encouraged to give tax effectively, but awareness remains "shockingly low" among young people, according the Charities Aid Foundation (CAF). CAF admitted it was surprised by how low awareness of tax efficient giving is, as it released a report today showing that just two thirds of the adult population know they can donate to charity in a tax effective manner. Less than a quarter of young people are aware that they are able to give tax effectively, a figure which Richard Harrison, director of research at CAF, said was “shockingly low” and a “missed opportunity”. “It is far below what we would like to see,” he said.
The chief executive of the Association of Charity Shops has announced she is stepping down as the organisation steps up lobbying for changes to gift aid. Lekha Klouda (pictured front left), who has been with the ACS since its establishment in 1999, plans to retire at the end of the year.
Technology is driving huge change in all areas of operations within civil society organisations, and charity shops are no exception, finds Tania Mason The last year or two has seen the widespread adoption of a new income stream for many charities – the collection of gift aid on items donated to shops. Several of the bigger shop chains have embraced this technology, including Help the Aged, Sense, British Heart Foundation, and Sue Ryder Care.
The Treasury has agreed to look at developing an ‘opt-out’ scheme for gift aid before the 2010 Budget following a meeting last week with the voluntary sector’s major umbrella bodies. The agreement is a coup for the sector groups, who had urged the government to introduce the scheme in a consultation on ways of improving gift aid take-up in 2007. At the time, government suggested this idea was too complex to introduce without more consideration.
I've just signed up for membership to a certain London cultural centre because, among other reasons, I'm a bit fancy like that. But just as I was about to place my order, I got asking - where's the gift aid?
Happy new year! Did you have a good Christmas? Eat lots of turkey? Celebrate with a luxury or two? Good on you, it can’t be all doom and gloom. But those early December paydays make January a long and difficult month, so I’m sure you will have (in some way) reviewed youar finances to see if you are making the most of your money.
Tories call for automatic gift aid system as charities miss out on £100m The charity sector has missed out on more than £100m since the changes to the gift aid system were introduced in 2000, according to Greg Clark, shadow minister for the cabinet office.
At Mencap, we are striving to be a diverse organisation. We aim to offer our services and support to anybody with a learning disability and their families and carers. We are striving to be a diverse organisation because we know that we’re not reaching enough people from black and minority ethnic communities in England, Wales and Northern Ireland.
The Institute of Fundraising will receive £310,000 a year for the next three years from the Office of the Third Sector to continue its gift aid programme.
Four out of five charities believe they are not fully prepared for a Gift Aid audit, according to new research from fundraising database provider Blackbaud.
