HMRC Charities Overview Specialist PT Charities, Savings & International Thursday 28 th April 2016 This is HMRC's current guidance - however this may be subject to change - due to legislative and guidance changes. Please refer to HMRC Charities published guidance on Gov.uk in the first instance.
Topics • HMRC’s Charity Outreach Team • Gift Aid Overview • Gift Aid Small donations Scheme (GASDS) • Making a Repayment claim • How to apply for recognition as a charity for tax purposes • Community Amateur Sports Club (CASC) • Payroll Giving • Value Added Tax and Charities (VAT) Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 2
HMRC’s Charity Outreach Team
HMRC’s Charity Outreach Team • Team of 8 experienced staff - set up in June 2014 • To help charities with their GASDS & GA claims • Registering & enrolling for our online services • Supporting our Charities Helpline • Presentations Protective marking – Unclassified, Protect, Restricted (delete as required)
Gift Aid Overview
What is Gift Aid? What is Gift Aid? • Donation from a UK Taxpayer £100 • Charity can claim £25 • Donor earned £125 before basic rate of Income Tax @20% was deducted Protective marking – Unclassified, Protect, Restricted (delete as required) | 6
Gift Aid Requirements The 5 main requirements of Gift Aid are; • Gift of a sum of money must be made to a Charity / CASC accepted by HMRC • Donations must be from an individual who is a UK taxpayer • Donor must make a valid Gift Aid declaration • Charity / CASC must be able to show receipt of donation • Payment must not have any conditions for repayment (to the donor) Protective marking – Unclassified, Protect, Restricted (delete as required) | 7
That tax can be • Income Tax paid at 20%, 40% or 45% rate • Tax deducted from Bank or Building Society interest at 20% rate • Tax deducted from dividend income at 10% up to 5 April 2016 • Capital Gains Tax paid at 18% or 28% Protective marking – Unclassified, Protect, Restricted (delete as required) | 8
About the Donor The Donor must be an Individual (not a Limited Company or PLC) who is; • Resident in the UK, or • Non-Resident in the UK - but must have paid sufficient UK tax • Council Tax & VAT cannot be used to cover Gift Aid • Residents of Isle of Man / Channel Islands / Republic of Ireland are Non Resident for UK tax purposes Protective marking – Unclassified, Protect, Restricted (delete as required) | 9
Gift Aid Declaration A Gift Aid Declaration must contain; • Name of charity or CASC • Name of donor • Ideally, we would like to see; Mr John Smith • We will accept; John Smith, J Smith, Mr J Smith • We will not accept; Mr Smith, Smith, John • Donor’s home address • Description of payment(s) • Declaration that payments(s) are Gift Aided • Must include a note that explains that the donor must have paid sufficient UK income or capital gains tax (not including VAT or Council Tax) to cover the tax claimed by the charity Protective marking – Unclassified, Protect, Restricted (delete as required) | 10
Addresses on Gift Aid Declarations YES • 11, WA8 4LY or Dunroamin, WA8 4LY • 11, Park Street, Widnes, WA8 4LY • 11, Park Street, WA8 4LY • 11, WA8. × NO × • Park Street, Widnes, WA8 4LY × • 11 Park Street. × • c/o Wetherspoons, Park St, Widnes × Protective marking – Unclassified, Protect, Restricted (delete as required) | 11
Sponsorship Gift Aid declaration form A Sponsorship Gift Aid declaration form must contain; • • Name of participant Name of charity the event is in aid of • • Sponsor’s Full Name Name of event • Sponsor’s Home Address • Gift Aid tick box • • Amount of donations collected Date that pledged donations were collected Must also contain the following statement; If I have ticked the box headed ‘Gift Aid? √’, I confirm that I am a UK Income or Capital Gains taxpayer. I have read this statement and want the charity or Community Amateur Sports Club (CASC) named above to reclaim tax on the donation detailed below, given on the date shown. I understand that if I pay less Income Tax / or Capital Gains tax in the current tax year than the amount of Gift Aid claimed on all of my donations it is my responsibility to pay any difference. Protective marking – Unclassified, Protect, Restricted (delete as required) | 12
Sponsorship Gift Aid Charity: The HMRC Auditors Benevolent Fund Name of Participant: John Smith Event: The 2016 Bootle Marathon Full Name Home Address Amount Total Please treat as Gift Aid Clark Kent 21, Worthing Drive, £1 per mile £26 Brighton BN4 1ZP Harry Potter 6, Nottingham Close, 50p per mile £13 Derby D4 2YP Bob the Builder 14, 50p per mile £13 CH2 1PY Protective marking – Unclassified, Protect, Restricted (delete as required) | 13
Joint Donations • Donation drawn on a joint bank account & charity has been given a Gift Aid declaration by one account-holder only. • Charity can assume that donation is from the donor who has made a Gift Aid declaration - even if cheque is signed by the other account holder. • If in doubt seek clarification from the donor e.g. a cheque drawn on the sole account of the other account-holder. Protective marking – Unclassified, Protect, Restricted (delete as required) | 14
Most Common Errors Save the World Charity • No declaration held by charity • Incomplete/incorrect Gift Aid declarations • No evidence of receipt of donation • Payment not received from an Individual – e.g. company donations • Payment not a Gift Protective marking – Unclassified, Protect, Restricted (delete as required) | 15
Retention of Declarations For Audit purposes; • Records should be kept for a period of 6 years (after the last donation) • Must be available for inspection • Can be retained as a scanned document Protective marking – Unclassified, Protect, Restricted (delete as required) | 16
Charity Auction £40 £100 £60 Shirt valued at £40, sold for £100 so Gift Aid can be claimed on £60. Protective marking – Unclassified, Protect, Restricted (delete as required) | 17
Charity Auction £250 £250 Signed shirt sold for £250. No Gift Aid can be claimed as is does not have a recommended retail price . Protective marking – Unclassified, Protect, Restricted (delete as required) | 18
Charity Dinners • The purchase of a ticket for Fund-raising Dinner / Charity Ball is not a Gift. • Ticket costs £100 (includes £50 donation to Charity) - not a Gift. • Ticket is £50 & a ‘suggested’ donation of £50 is requested – the donation could be a Gift? Protective marking – Unclassified, Protect, Restricted (delete as required) | 19
What is a benefit? • Any item or service provided by the charity or a third party to the donor or a person connected with the donor as a consequence of making the donation • When someone makes a donation, you might want to give the donor something in return (an item or service) to say thank you. This is known as a ‘benefit’ • We have to apply the benefit rules as there limitations on what a donor can receive. Protective marking – Unclassified, Protect, Restricted (delete as required) | 20
Gift Aid donor benefit limits • You can claim Gift Aid on the donation if the value of the benefit doesn’t exceed certain limits, for example: • From 6 April 2011; The maximum limit for a series of benefits given to a donor was increased to £2,500 per tax year (previously £500 per tax year) Protective marking – Unclassified, Protect, Restricted (delete as required) | 21
Not Gifts You can’t claim on donations; • The purchase of books, jumble sale items, bedding plants, food, alcohol etc. • Admission to events e.g. concerts, recitals etc. • Golfing fees, Day Trips, Transport etc. • Fees to adopt / re-home an animal • Raffles, lottery tickets & 200 Clubs • Hire of own premises Protective marking – Unclassified, Protect, Restricted (delete as required) | 22
Time Limits for claiming Gift Aid • A charity which is a Company for tax purposes must make any claim within 4 years from the end of the accounting period to which the claim relates. • A charity which is a Trust for tax purposes must make any claim within 4 years of the end of the tax year to which the claim relates. Protective marking – Unclassified, Protect, Restricted (delete as required) | 23
Any Gift Aid Questions?
Gift Aid Small Donations Scheme (GASDS)
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