The Gift Aid Appeal
As academies increasingly have to come up with creative ways to address funding shortfalls, Gift Aid can be a useful and simple method to boost the amount raised from UK taxpayers on cash donations and crowd funding appeals.
Gift Aid is a policy that enables tax-effective giving by individuals to charities, including Academy schools and Parent Teachers Associations that are registered as a charity, in the UK.
Example: £1 donation = £1.25
(20% rate of tax = £1.25 gross)
To qualify for Gift Aid, donations must be gifts of money by a UK taxpayer to a charity, with a Gift Aid Declaration. It must not be a payment for goods or services, or an asset and must not be the write off of a loan.
Which donations qualify?
Funds can be donated to the school charity, but must be voluntary and pupils must be allowed to not wear school uniform, whether or not they have made a donation, in order to qualify for gift aid.
Crowdfunding & Building Appeals
School charities sometimes appeal for funds to help towards a new building, such as an art block, library or sports facility. Provided no access rights restrict which pupils can use the facilities and which parents donate, then donations can qualify for Gift Aid.
Donations made for sponsored activities such as fun runs, reading challenges, spelling bees or swimming challenges etc. can be subject to Gift Aid, provided the donor receives nothing in return.
Fund raising events
For events such as firework displays or concerts, payment must be voluntary and not linked to attendance at the event. For example, payment for tickets cannot be gift-aided, however a donation on top of the ticket price could be allowable.
Donations made by eligible parents in a collection box at a school play would qualify for Gift Aid and could be claimed using the small donations scheme (GASDS) - see below
Before a claim can be made, the Academy (or PTA) must apply to HMRC to get recognition for the charity by completion of an online form. Once a charity reference number is provided, the charity can make claims.
Eligible parents and other supporters will need to confirm that they are UK taxpayers by completing and signing a Gift Aid declaration form, which must be kept on file. One form is sufficient for every gift made to the same charity, for whatever period of time the donor chooses. However, it is the donors’ responsibility to ensure that they have paid or will pay an amount of Income Tax and/or Capital Gains Tax for the relevant tax year that is at least equal to the amount of tax that all of the charities they donate to will reclaim.
The Gift Aid Declaration can be provided in writing, via the internet or, by email and even orally; but it must be auditable. Under the Small Charitable Donations Bill, the Gift Aid Small Donations Scheme (GASDS), means that from April 2013 no gift aid declarations are required where the donation is £20 or less (or less than £5,000 overall per charity per year). The Academy must have made successful Gift Aid claims and have a good compliance history in order to make a claim under GASDS.
For further information, or an informal discussion on the implications please contact us.