The new rules are designed to make the process simpler for donors using digital platforms or text messages, such as Just Giving and Virgin Money Giving, to give 
to multiple charities under a single declaration. This will hopefully encourage more donors to Gift Aid what they give which benefits the end charity.
Under current HMRC rules when donations are given charities can claim an extra 25p from the government for every £1 donated if Gift Aid is applied. In order for the charity to benefit from it the donor has to agree to it being applied, usually by completing a form giving details of their home address and tax status.
From the start of the new tax year donors can give intermediaries the authority to create Gift Aid declarations on their donations for the rest of the tax year. HMRC has said that if intermediaries get authority on or after the 1 March, they can make Gift Aid declarations for the remaining tax year and all of the next tax year from 6 April.
Intermediary donation collectors can get authorisation to make Gift Aid declarations at any time during the tax year from the donor. Those intermediary collectors will need to tell the donor that if they pay less Income Tax and Capital Gains Tax than the amount of Gift Aid on their donations in a year, they’ll have to pay the difference .
Once authorisation has been obtained from the donor they can make Gift Aid declarations for the rest of the tax year or until they cancel it. This process won’t affect any current or future enduring Gift Aid declarations.
Anyone who agrees to Gift Aid all donations made through an intermediary collector going forward will receive an annual statement between the 5 April and 31 May for the previous tax year. The statement will either be sent directly to the donor or they will be told it has been produced and provide instructions on how to access it.
Such statements don’t need to be sent to donors who:
- only make one Gift Aid donation in a tax year
- donated less than £20 in total in a tax year
Included in the annual statement will be:
- the total amount of the donations that were Gift Aided
- the maximum amount of Gift Aid that can be claimed on their Gift Aided donations
- an explanation that donations directly to charities or to other intermediaries are not included in the statement
- an explanation that if the donor pays less Income Tax and Capital Gains Tax than the amount of Gift Aid claimed in a year, they’ll have to pay the difference
Businesses operating an intermediary charity collection platform who are planning to make use of these changes in the rules you need to be aware that there are penalties if you get it wrong.
They need to keep certain records about the donor’s authorisation including the:
- date authorisation was given and the donor’s name and address
- date of any cancellations and the donor’s name and address
- explanation that the donor must pay more tax than the Gift Aid on their donations and the date this was given
- annual statement or how you made the annual statement available to the donor
They must keep records of these events for 6 tax years from the end of the year when they were given or sent. They’ll need to provide these to HMRC on request. They could receive a £300 fine plus an additional daily penalty if they fail to provide these records.
In addition intermediary collectors may be charged for any failure to keep records or issue a statement. They could be fined £50 for each failure to keep a record or issue a statement with fines of up to a total of £3,000 in a tax year. This cap does not apply to the daily penalty for not providing records to HMRC.
You can find more information about the HMRC guidance on changes to Gift Aid on the .gov website
The Bedrock team has experience of working with charities and not-for-profit organisations, if you’d like to know more give us a call or take a look here.
