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Before your charity or Community Amateur Sports Club (CASC) can claim tax back on a donation made by an individual, you must obtain a Gift Aid declaration from that individual - the donor.
The declaration must contain certain information about the donor. Your charity or CASC must also have advised the donor that they will need to pay at least as much UK Income Tax and/or Capital Gains Tax for the year of donation as your charity or CASC, and any other charities and CASCs they donate to, will reclaim on their donation. The easiest way to do this is to include the explanation in the declaration. Remember that donors should be made aware that HM Revenue & Customs (HMRC) may recover unpaid tax from them.
HMRC may ask to see the declarations so your charity must keep these records to support your Gift Aid repayment claims. It is important to remember that every donation included in a claim must be supported by a Gift Aid declaration.
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There is no set design for a Gift Aid declaration, but there is certain information that must be included. A declaration by a donor can be made in writing, orally or electronically. HMRC provides 'model' Gift Aid declarations for different situations - these are examples of Gift Aid declarations with wording printed on them to make them easy to use. By using a model declaration, and making sure your donor completes it in full, you can be confident that the declaration meets HMRC requirements.
You can choose to use your own Gift Aid declaration form but as noted above it must contain certain information. This is explained in the section below 'Using your own Gift Aid declaration- information needed by HMRC.
If your charity or CASC uses the model declarations you can be confident that, when completed fully, the declarations will meet HMRC requirements. Your charity or CASC can add additional information such as data protection disclaimers, bank mandate details or reference numbers onto the model Gift Aid declarations to suit your needs.
There are three model declaration forms, each one for a different situation. Please note the wording shown in italics on the first two model declarations is optional but should be included if possible.
As a minimum, all Gift Aid declarations your charity or CASC receives must contain the following information:
Your charity or CASC must explain to donors who are making a Gift Aid declaration that they need to pay at least as much UK Income Tax and/or Capital Gains Tax for the year of donation as you, and any other charities and CASCs they donate to, will claim on their donations. Donors need to understand that if they do not pay this much tax HMRC may recover any shortfall from them. It is not enough to ask 'Are you a UK taxpayer?' or 'Are you UK resident?' - donors need to be aware that they must pay enough UK Income Tax and/or Capital Gains Tax to cover the amount all charities and CASCs they donate to will claim in Gift Aid. Payments of other taxes, for example, VAT or Council tax, do not qualify.
To ensure that a declaration is valid HMRC has revised the wording of the suggested 'tax to cover' statement which takes effect from 24th Feb 2012. Although donors have always been required to pay enough tax to cover the Gift Aid claimed on all their donations this revised wording helps the donor to understand what they will need to have paid for a charity to be able to claim Gift Aid on their donation(s).
The revised wording sets out that:
If your charity or CASC does not provide this explanation the declaration will be invalid and Gift Aid will not be due on the donation. If your charity or CASC claims Gift Aid on a donation that is not eligible for Gift Aid, or fails to obtain a Gift Aid declaration, HMRC will require the charity or CASC to repay the tax. However if a valid declaration has been obtained and the proper explanation given about the donor paying enough tax, but the donor does not in fact pay enough tax, then HMRC may recover the tax from the donor. A transitional period was available until 31 December 2012 to update the wording on Gift Aid declarations, but all declarations made after 2012 must incorporate the new wording.
Gift Aid declarations can be made in writing or orally. Written declarations may be made either on paper or electronically, for example, by e-mail, fax, or text message or on the internet. Oral declarations may be made in person or by telephone.
There is a different procedure for declarations relating to donations for sponsored events. See the section 'Declarations linked to sponsored events'
Many charities and CASCs use a paper declaration based on the HMRC model declarations. A declaration can also be printed on collection envelopes used in church services or for house to house collections.
A paper Gift Aid declaration cannot be made by default. There must be a positive decision, for example a box ticked by a donor, to show they agree to Gift Aid their donation(s). It is not acceptable to assume all donations are eligible for Gift Aid unless the donor tells you otherwise.
An electronic declaration made on a charity's or CASC's website can be accepted as a written form of declaration. Your charity or CASC must ask donors to provide the same details as required for a hand-written declaration.
The website must also contain a note or statement to the donor, that they must pay at least as much UK Income Tax and/or Capital Gains Tax for the year of donation as you, and any other charities and CASCs they donate to, will claim on their donation(s). This must be clear and visible when the donor is completing their Gift Aid declaration online and the website should be constructed to ensure the donor reads the statement before completing the declaration. This may be done by way of a 'tick box' or by use of a page the donor has to confirm they have read before they can move on. Where possible the message should also tell them exactly how much that tax is.
An electronic Gift Aid declaration cannot be made by default. There must be a positive decision, for example a box ticked by a donor, to agree to Gift Aid their donation(s).
Your charity or CASC may choose to keep a voice recording of all oral Gift Aid declarations.
If you don't keep voice recordings of oral declarations, you must send the donor a written confirmation of their declaration which:
The oral declaration is not effective until you send this written confirmation to the donor. If the donor cancels the declaration within the 30 days allowed, your charity or CASC must repay to HMRC any tax you have already reclaimed.
You must keep auditable records of written confirmations issued and any cancellations received. These records can be kept electronically.
Again, as for paper and electronic declarations, an oral Gift Aid declaration cannot be made by default. There must be a positive decision by a donor to agree to Gift Aid their donation(s).
An enduring declaration is one that includes a particular donation and all future donations. The charity or CASC must make it clear to anyone who makes an enduring declaration that if they make a donation for which they will not have paid enough tax to cover the amount to be reclaimed, for example, a donation from a legacy, they must tell the charity or CASC so that they do not claim Gift Aid on the donation.
Spouses and people living at the same address can make a joint declaration, in effect making two or more Gift Aid declarations on the same form. All the donors must be individual taxpayers. The declaration must include the full name, address and postcode of each person. Joint payments should be split equally between the donors unless both parties tell your charity or CASC how they want their payments to be split. They should also keep this information for their own tax records. Where the declaration form asks for a signature, only one of the donors needs to sign it.
Your charity or CASC will need to list each donor separately on the Gift Aid claim schedule that you complete for your tax repayment claim, and this form needs to show the amount of the donation from each of the donors.
For information on business partnership declarations, see 'particular types of Gift Aid declarations' in the detailed guidance.
To save time and help your record keeping, your charity or CASC can use a sponsorship form that can also be used as a Gift Aid declaration form. HMRC provides a model Gift Aid sponsored event form.
If your charity or CASC chooses to produce its own sponsorship form to use as a Gift Aid declaration form, you should add the Gift Aid declaration at the top of the HMRC model sponsor form and direct sponsors to read it. The form should have a column that a sponsor can tick to choose to pay their sponsorship money to your charity or CASC as a Gift Aid donation. The form must include the following information:
A declaration can include the name of more than one charity or CASC, for example when a joint fund raising event is held. The charities or CASCs must ensure that:
Your charity or CASC must store records so that you clearly show that each donor included in your repayment claim has made a declaration. You must keep an auditable record of all Gift Aid declarations, whether they are written, electronic or oral, and make them available for review if required by HMRC. Remember that if your charity or CASC has not kept an auditable record of declarations and the making of them then it will need to issue written confirmations.
Paper declarations can be kept in their original format. If you prefer you can scan the paper declarations and store the scanned copies electronically, as long as they can be searched and individual declarations located as required. If your charity or CASC keeps scanned copies which are fully auditable you can destroy the originals. Transcription onto a separate list or database is not an acceptable alternative to keeping the original declarations or scanned copies.
Your charity or CASC can store records of donors who have made a declaration
electronically on a database but you will still need to be able to
demonstrate that each donor did give a declaration.
If your charity or CASC uses oral declarations you could make a voice recording of these in full at the time they are made and retain the recordings. If you don't do this your charity or CASC must confirm the declaration in writing to the donor and be able to provide evidence of this correspondence.
If you keep records on computer, it is advisable to make regular backups and store them in more than one location.
The time limits for keeping Gift Aid declarations and Gift Aid payment records depend on how your charity or CASC is treated for tax purposes. All CASCs and most charities will be treated as companies for tax purposes. Your charity will only be treated as a trust if it was set up by a trust deed or a will.
If you have any enduring Gift Aid declarations covering ongoing donations you will need to keep them permanently. If the donations stop then the time limits below apply from the date of the last donation.
A single Gift Aid declaration may apply to more than one donation, so you'll need to work out when the last donation specified on a particular declaration is received, and keep the declaration for long enough to satisfy the rules set out below.
If your charity is run as a charitable company - which most are - or your club is a CASC, you must keep your tax records (including Gift Aid declarations and records) until six years after the end of the accounting period they relate to.
For example, if a charitable company prepares its accounts to 31 December 2012 and makes a Gift Aid repayment claim for that period during 2013, it must keep the records until at least 31 December 2018.
If HMRC asks you questions about your tax return or repayment claim, you will need to keep the records until the enquiries are finished.
You should keep your tax records (including Gift Aid declarations and records) for six years after the end of the tax year they relate to.
If you are asked to make a tax return there are different rules about how long you must keep records for. If HMRC asks you questions about your tax return or repayment claim, you'll need to keep the records until the enquiries are finished.
If before January 2012 you followed previous HMRC guidance and destroyed records between four and six years old you will not be penalised. However if you have kept your records from that period you must continue to keep them for the time specified above as you may be penalised if you destroy records which you are required to keep.
A donor can cancel an enduring Gift Aid declaration at any time. For example a donor may cancel their declaration because they no longer pay any UK tax. Cancellation of a declaration will not affect Gift Aid donations that have already been made but once a declaration has been cancelled any further donations from that donor won't qualify for Gift Aid. Your charity or CASC must keep records of cancelled Gift Aid declarations, including the date of cancellation.
Written Gift Aid declarations relating to 'one-off' donations cannot be cancelled once the donation has been made.
An oral declaration can be cancelled by a donor within 30 days of a letter being sent by a charity or CASC confirming the donor's verbal declaration.