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 email@example.com
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