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.
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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 National Trust has doubled gift aid revenue in eight of its properties by introducing specialist EPoS systems.
Gareth Jones explains the think-tank’s proposed system for moving gift aid administration online.
More than £750m is lost every year in gift aid because of an outdated system that disincentivises charities and the Treasury to make the most out of it, according to a report by think-tank ResPublica.
The Charities Aid Foundation has commissioned a study on how technology can be used to make the gift aid process more manageable.
School increases gift aid income by 50 per cent after CRM healthcheck
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.
Retail therapy
Technology is driving huge change in all areas of operations within civil society organisations, and charity shops are no exception, finds Tania Mason.
We need to talk about finance
How connecting technology can help to improve relationships across an organisation
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