To allow charities and community amateur sports clubs (CASCs) to claim tax back on eligible donations, Gift Aid declarations must be completed by the donors. This is subject to the Small Donations Gift Aid Scheme, which is not affected by the recent changes to the declarations and so is outwith the scope of this article.
Last year, HMRC reviewed its Gift Aid declaration templates and the necessary requirements for a valid Gift Aid declaration in an attempt to simplify the content of the declarations and make them easier to understand and complete. The new templates were introduced in October 2015.
First of all, the templates provided by HMRC have been split and there are now separate declarations for the different entities: for charities and for CASCs. The ‘I am a UK Taxpayer’ statement has been simplified by the removal of references to other forms of tax, ie e.g. VAT and council tax, to avoid confusion.
The main change is the requirement to advise the donor that if the amount of tax they have paid during the relevant tax year is less than the amount of Gift Aid claimed on their total donations, then they are liable to pay the difference and make up the shortfall. This clear statement makes it easier for the donors to understand the implications of applying Gift Aid to their donation and the consequences if the level of tax they have paid is insufficient.
Requirements for a valid declaration
Gift Aid declarations can be written, verbal or completed online. No matter what method is used, the information required from, and to be given to, the donor to ensure the declaration is valid remains the same:
- The name of your charity or CASC
- the donor’s name and home address
- whether the declaration covers past, present or future donations or just a single donation
- a statement that the donor wants Gift Aid to apply; and
- an explanation that the donor needs to pay the same amount or more of UK Income Tax and/or Capital Gains Tax as all charities and CASCs will claim on the donor’s gifts in a tax year and that the donor is responsible to pay any difference
HMRC provides templates for charities and CASCs to use on its website. As well as separate templates for charities and CASCs, there are separate templates for one-off donations, multiple donations and sponsored events.
Use of its templates is not enforced by HMRC. As long as the declarations are valid and contain the information listed above, they can be adapted and tailored by charities and CASCs as they see fit.
What do you need to do?
Although the revised templates are available for use now, and it is recommended that they are used as soon as possible, charities and CASCs have until 5th April 2016 to update their Gift Aid declarations, ready to be issued to new donors. This ‘grace period’ is to allow time for charities and CASCs to review and update their declarations and also to use up fundraising materials that are likely to have been pre-printed to reduce waste and additional expense. After this date, HMRC will not accept declarations which are invalid and not compliant with the requirements.
Existing declarations which have been signed and are still effective (ie for future donations) will remain valid and new declarations don’t need to be signed to replace them. The new declarations must be used going forward.
A key message in relation to valid Gift Aid claims which has not changed, and remains fundamental to the process, is accurate record keeping of Gift Aid declarations and documentation for at least 6 years. Inaccurate records may result in repayments and other queries from HMRC.
If you have any queries, please contact our Charities Legal Team at firstname.lastname@example.org or call us on 0131 228 8111.