Gift Aid is an income tax relief designed to benefit charities and Community Amateur Sports Clubs (CASC) by allowing them to claim back 25p for every £1 donated by UK taxpayers.
To be eligible, organisations must be recognised by HMRC as a charity or a CASC and need to ask donors to make a Gift Aid declaration when they donate. There are, though, special exemptions where you don’t need a declaration for small amounts of fundraising.
You must be recognised as a charity or Community Amateur Sports Club for tax purposes to be eligible
Payments made to organisations which are not strictly gifts may be treated as donations for Gift Aid purposes, if the value of the reward is minimal – that means that under certain circumstances organisations can claim Gift Aid even when donors get some benefit in return.
Gift Aid can be claimed if the value of the reward doesn’t exceed:
- 25% of the donation for contributions up to £100
- £25 for donations of between £101 and £1,000
- 5% of the donation (up to £2,500) for donations of £1,001 and over.
You may be able to claim 25% on cash donations of £20 or less, even if you don’t have a Gift Aid declaration from the person who’s donated the money. This is called the Gift Aid small donations scheme (GASDS). You can claim up to £1,250 in a tax year (i.e on donations of up to £5,000). From 6 April 2016, you can claim up to £2,000 in a tax year or £1,250 for earlier years.
Some things to think about:
- Gift Aid is a benefit given for organisations via the tax system, and so HMRC have lots of guidelines on what is needed to ensure that you’re claiming it on genuine donations for a charitable purpose, and not enabling forms of tax evasion. It can be quite complicated, so it’s worth making sure you fully understand the regulations before starting in earnest so you don’t get nasty surprises further down the line.
Is my club organisation eligible?
You must be recognised as a charity or CASC for tax purposes. There are rules on which donations you can claim Gift Aid on. You can claim Gift Aid online and you should get your payment within five weeks