Gift Aid is a scheme whereby you can give a sum of money to your church and the church can reclaim the basic rate of tax on the donation from HM Revenue and Customs.
“The Church of England parishes collectively receive over £80 million in Gift Aid tax rebates each year… sufficient to pay 1,600 stipendiary clergy. This is a great tribute to the hard work of volunteers running Gift Aid programmes in parishes throughout the country” (Church of England Parish Resources)
A gift from the Government to your church
- Do you pay income tax or Capital Gains Tax?
- Do you give to your church?
- Would you like your church to be able to reclaim the tax which you have paid?
If you answered YES to all of these questions, if you give using the Gift Aid Scheme it will enable your church to reclaim the tax paid on the amount that you give. Tax payers can increase the value of their donations significantly currently by 25% - that is 25p for every £1 donated, if they sign a Gift Aid declaration.
Gift Aid is very simple
Your church is likely to have somebody who deals with reclaiming tax on donations made. He or she may be called the Gift Aid Secretary, or something similar. Just let them know that you would like the church to be able to reclaim the tax paid on any donations that you make. They will ask you to complete a simple declaration, and then it will be possible for the claim to be made.
Her Majesty's Revenue & Customs (HMRC) requires churches to have an audit trail of all donations made. It is, therefore, much easier if donations are made by cheque, standing order or through the weekly envelope scheme. Some Gift Aid can be claimed on cash in church and other collections but the amount that can be claimed is limited so it’s best for your church if you still give through the regular Gift Aid scheme.
New to Gift Aid?
We run occasional introductory sessions to help anyone new to claiming Gift Aid or who would like a refresher. These sessions cover the basics of Gift Aid including GA declarations, how to claim on line and the Small Donations Scheme. Please e-mail Gabby Parikh for more information.
Claiming Gift Aid for your church?
Churches are charities, and can recover the basic-rate tax paid on donations made by donors who are UK taxpayers. Claiming Gift Aid is relatively straight forward once your systems are set up. You need to register with HM Revenue & Customs (HMRC) and ensure you have an audit trail so you can track donations. Donors who are tax payers need to complete a Gift Aid declaration allowing the tax to be recovered.
Are you following best practice for your church?
Look at the checklist below to make sure you are following best practice in your church:
1. New wording for Gift Aid declarations
The main change is to make clear that it is the donor’s responsibility to pay any difference between the amount claimed in Gift Aid for all charities to which they have donated in a tax year and the amount paid in Income tax or Capital Gains tax.
The new Gift Aid declarations came into force from 6th April 2016. Model Gift Aid Declarations, which you can personalise for your church, can be found by clicking the links below.
You can however, use up any stocks of printed envelopes that you have and existing enduring Gift Aid declarations remain valid.
2. Write to your planned givers every year to:
- Thank them for their giving
- Ask those who are not giving through Gift Aid to check whether they are eligible, and if so, whether they would consider giving through Gift Aid
- Ask your Gift Aid givers to check that they are still paying sufficient tax to cover all their charitable donations, and if not, to inform you so that you do not overclaim for them.
3. Claim through the Gift Aid Small Donations Scheme (GASDS)
Charities can also claim a Gift Aid like repayment on up to £8,000 on small cash donations each tax year, which means the maximum amount claimed is £2,000 (prior to 2016/17 charities could only claim on total donations up to £5,000). Eligible donations must be £20 or less in cash. This scheme is relatively new and many of our churches haven’t yet claimed so you might want to find out more at the Gift Aid Information for Churches page here.
4. Ensure you have one-off Gift Aid envelopes available.
The GASDS scheme is useful, but it is better if visitors use one-off envelopes as some churches will use up GASDS allowance before the year end and donations of more than £20 or by cheque can’t be claimed on through the GASDS scheme.
5. Claim Gift Aid regularly. If you’re using the online claims process or Gift Aid software, you can help your church’s cash flow by claiming quarterly or even monthly. If you’re struggling with the online process please ask us for help – e-mail Gabby Parikh.
6. It is also good to work with those who lead on stewardship in your church - maybe the vicar or the Chair of the stewardship Committee to encourage people to review their giving and – if at all possible – increase it.
Further help and information
If you would like more information about any aspects of tax-efficient giving including Gift Aid, please contact Gabby Parikh.
Frequently Asked Questions by donors
Do I have to give a regular amount each week or each month or each year?
No, but it is good to give regular amounts to your church as this helps them to plan their budget. However, the benefit of the system of the Gift Aid declarations is that once you have agreed that the church may collect the tax paid on your donations, your permission may be applied to any gifts which you make to your church.
I am due to retire next year and I do not know whether I will still be paying tax.
You may allow your church to reclaim the tax on any gifts which you make until you no longer pay tax. If your tax situation changes for any reason and you no longer pay tax then, you should advise the Gift Aid Secretary immediately. As we are now reminded in the wording on the new Gift Aid declaration, it is your responsibility to pay any difference if you pay less Income Tax and/or Capital Gains Tax than the amount of Gift Aid claimed on all your charitable donations in that tax year.
What if I’d like to make a "one-off" gift?
If you have already signed an Gift Aid Declaration, you need do no more; any recorded gifts which you make to your church will be tax efficient.
If you have not signed a declaration, please contact your Gift Aid Secretary; you may either sign a declaration which relates to this specific gift or an enduring one which will allow your church to reclaim the tax on all gifts that you make in the future.
What does this mean to me if I do not pay tax?
You may not give under the Gift Aid scheme if you do not pay tax. However, do remember that it is not just income tax that can be reclaimed. If you have paid capital gains tax, you are also entitled to use the scheme.
(Even if you are not a taxpayer, whenever you give £20 or less as a cash gift your gift will be able to qualify for the Small Donations scheme and your church will be able to claim a Gift Aid like repayment.)
What if I pay tax at more than the basic rate?
When you complete your annual tax return you must include all your Gift Aid donations on your Self Assessment Tax return and HMRC will refund the difference between the basic rate of tax and the higher rate on all charitable donations. So, for a gift of £100, your church will receive £25 from HMRC, and higher rate tax-payers can claim the difference between the higher rate ad basic rate.
Support for parishes claiming Gift Aid
C&R hold an annual meeting for Gift Aid Secretaries in the Diocese where we make sure you have information on any changes to the scheme as well as have the opportunity to share ideas and any problems. We also run training sessions for those new to the role and can offer some one to one guidance if that is what you need. The stewardship newsletter Stewardship Shoots also contains the latest information on Gift Aid. Contact Gabby Parikh for more information.
General information on claiming Gift Aid can be found on the Parish Resources website http://www.parishresources.org.uk/ by clicking here and detailed guidance can be found on the HMRC website –https://www.gov.uk/government/publications/charities-detailed-guidance-notes/chapter-3-gift-aid.