FREE MONEY! Read on…
Church of England parishes collectively receive nearly £90 million in Gift Aid tax rebates each year, around £40 million more than the amount collected in the year 2000, and sufficient to fund 1,600 stipendiary clergy! This is a great tribute to the hard work of volunteers running Gift Aid programmes, as well as a testimony to the value of the Gift Aid scheme. It’s important to claim it and to get it right.
Each year remind your donors to check that they are still taxpayers, and notify you if they are no longer paying sufficient tax – the personal allowance has risen in recent years, taking a number of people on lower incomes out of the tax bracket.
Gift Aid only applies to gifts of money from individuals who are UK taxpayers
- ‘Gifts’ – that is, the donor receives nothing in return for the donation, and the gift is entirely voluntary
- ‘Money’ – that is, there must be a gift of money from the donor to the church. ‘Money’ can mean cash, cheque, bank transfer, credit card payment etc, but gifts in kind and gifts of time and talents are not directly eligible.
We have seen that Gift Aid is only payable on gifts of money. For example, someone in the church buys flowers, or pays for travel/ stamps out of his/her own pocket for the church, the church cannot claim Gift Aid on the value of these items. However, if you wanted to maximise your Gift Aid income, you could suggest that your generous buyer submits receipts for the goods, claims the money back from the church, and then separately donates it to the church. The money must be paid to the buyer, and then given back again. This last donation can be Gift Aided as long as the buyer gives it freely, and is an eligible UK taxpayer and makes a valid Gift Aid Declaration. It is important to have a sound audit trail and receipts for all transactions.
There are no personal tax implications for a volunteer receiving money in this way as long as the money is simply reimbursing expenses incurred on behalf of the charity; the volunteer is not employed and is not receiving remuneration for his/her services.
But, you cannot offer to pay expenses only on condition that the volunteer Gift Aids them back to the church!
All Gift Aid claims must be supported by a sound audit trail so that the church can prove the claim was valid
- ‘Sound audit trail’ and ‘proving the claim was valid’ – that is, complete records for each donation must be kept safely for at least 6 full tax years after the donation, and these records must include valid Gift Aid Declarations covering all donations.
Payments that don’t qualify for Gift Aid
As you will have gathered, it is not necessarily easy to state categorically what church events will and won’t be eligible for Gift Aid. Here (paraphrased for the church) are HMRC’s examples of payments where you cannot claim Gift Aid:
- Donations of money from a company
- Gifts made using ‘charity vouchers’ or ‘charity cheques’ provided by another charity e.g. CAF or Stewardship. This is because tax has already been reclaimed on these
- Gifts made on behalf of other people. For example, Mrs Smith might pay for a Christmas Dinner ticket on behalf of Mrs Jones. This is a gift from Mrs Smith to Mrs Jones, not a gift made to the church
- Gifts that come with a condition about repayment. Short-term loans (or indeed loans of any type) are not eligible for Gift Aid either
- Loan waivers or debt conversion. For example, an individual may lend money to your church and then, at a later date, agree that it does not have to be paid back. This is not technically a gift of money; it is the waiver of a loan
- Gifts with enforceable conditions about how your church should use the money. If, for example, the local florist makes a donation to the church on condition that the church then buys all of its flowers from the florist, the florist’s donation could not be Gift Aided
- Payments received in return for goods or services, such as payment for admission to a concert, payment for a raffle ticket, an entrance fee for an adventure challenge event etc. These are payments, not gifts
- A ‘minimum donation’ where there is no choice about payment. For example, a church might charge a ‘minimum donation’ for entry to a Quiz Night. This is actually a fee or ticket for goods or services, not a donation.
The simple rules of thumb are:
- Gift Aid only applies to gifts of money where there is negligible benefit in return
- If in doubt, check before you claim!
You can contact the finance team at Diocesan House on 01603 882347 or firstname.lastname@example.org
This article is from...
Articles in this issue...
Twinkling bright in Sheringham
I’m now in my tenth year of ministry in Sheringham and it was soon after my arrival that I thought a Christmas Tree Festival would look wonderful in the light, wide-open spaces of St Peter’s Church.More
Orienteering and the Nativity
To mark the season of Advent, Victory Villages and St Mary’s Church, North Elmham last year had a nativity trail.More
Classic return of the tea towel!
The Advent and Christmas period in Cawston is a very lively time for the church.More
School children involved in Church graffiti
With leaking roofs, rusting downpipes and gutters with large holes, St. John the Baptist Parish Church was urgently in need of repair.More
Provisions for the local community
In October 2017 I received a phone call from the Heritage Lottery informing me that our application for urgent repairs and a heritage project focussing on some of the church’s key features had been successful.More
Food safety law & church activities – a brief guide
Food provided by churches is subject to food law and must be safe to eat.More
Welcome to ‘OUR’ parish
St Mary’s Church likes to give a Welcome Bag to new people moving into the parish of Watton, as a means of introducing the Church and its activities, enclosing other items to welcome the new residents to the community.More
Serious about entertaining
The process starts with a visit to your local council office to register your interest, obtain the necessary forms but most importantly seek their help and advice!More
No bullrushes, but a catwalk and basket!
Recently I was asked to swap the aisle for the catwalk, I can assure you it was all in a good cause.More
Licensing law & church activities – a brief guide
The Licensing Act 2003 may affect some church events, regulating entertainment and the sale of alcohol. Fortunately, it makes exceptions for some occasional activities.More