Understanding the Gift Aid Declaration Process: A Guide for Charities and Charity Teams/Volunteers
Gift Aid is a valuable scheme that allows charities to reclaim tax on eligible donations made by UK taxpayers. For every £1 donated, the charity can claim an additional 25p from HMRC - provided the Gift Aid process is followed correctly. To help your charity maximise its fundraising potential while staying compliant, here’s a step-by-step guide to ensure all eligible donations qualify for Gift Aid.
What is Gift Aid?
Gift Aid is a UK Government initiative enabling charities to increase the value of donations from UK taxpayers. Your charity has to register with HMRC to be able to claim gift aid, and information on this can be found here.
But this article is going to focus on the internal process you and your team need to follow to make sure you claim as much as possible. The process requires a valid Gift Aid Declaration from the donor, and without this, your charity cannot claim the additional funds from HMRC.
Your Team’s role in the Process
As a member of the charity’s team, your role is crucial in ensuring all donations eligible for Gift Aid meet the necessary criteria. Here’s what you need to do:
1. Check Donor Eligibility
Before proceeding, confirm that:
- The donor is a UK taxpayer.
- They understand they must have paid or will pay enough Income or Capital Gains Tax to cover the amount your charity will reclaim.
Non-taxpayers or those who do not meet the criteria should not complete a declaration
2. Provide the Correct Declaration Form
Direct donors to complete a valid Gift Aid Declaration Form. The official forms and templates are available on the UK Government website: Claim Gift Aid - Gift Aid Declarations.
Make sure the declaration form includes:
- The donor’s full name.
- Their home address.
- A statement confirming they want their donation(s) to qualify for Gift Aid.
- A date and signature (if using paper forms).
For online or verbal declarations, ensure the same details are recorded securely.
3. Ensure the Declaration Covers the Correct Donations
Gift Aid Declarations can:
- Apply to a single donation.
- Cover all past and future donations, provided the donor explicitly agrees.
- Relate to a specific sponsored event
Ask the donor to clarify their preference and ensure it is documented correctly.
4. Record and Store Declarations Securely
Once a declaration is completed, it must be:
- Stored securely for at least six years after the last Gift Aid claim associated with it.
- Kept in a format that’s easily retrievable in case HMRC requests an audit.
Use your charity’s designated storage or CRM system to log these details.
5. Submit Claims to HMRC
When you’re ready to claim Gift Aid:
- Gather all eligible donations and corresponding declarations.
- Use the Government’s Gift Aid claim system, ensuring the information matches your records.
Submit claims periodically (e.g., monthly or quarterly) to help cash flow – you don’t have to wait until the end of the year.
6. Educate and Inform Donors
Many donors are unfamiliar with Gift Aid, so it’s vital that all members of the team are able to explain:
- How their tax payments enable the charity to reclaim 25p per £1 donated.
- It is their responsibility to notify your charity if they stop paying enough tax or change their details.
Providing clarity upfront reduces confusion and avoids errors in the declaration process.
Final Thoughts
Gift Aid is a simple but powerful way to enhance your charity’s fundraising impact. By following the steps outlined above, your team can ensure compliance and maximise the benefit to your organisation. Without the valid Gift Aid Declaration, your charity could be missing out (or have to repay) valuable additional funds.
For further guidance, consult the official HMRC resources linked above or speak to your Gift Aid administrator.
Let’s work together to make every donation go further!
If you have questions or need further assistance with Gift Aid, feel free to reach out to Beeston-Clarke Accountants.