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How do Gift Aid and charity tax reliefs work?

Gift Aid and every other charity tax relief start with recognition by HMRC. The steps take trustees and treasurers through them in order: recognition and Charities Online, then Gift Aid declarations, records, eligibility, donor benefits and claims, the small donations scheme and charity shops, then trading income, VAT, business rates, stamp duty and gifts of shares or land, across the UK.

19 steps, in the order you meet them.

Charity status and charitable tax status are not the same thing, and registering with the regulator does not register you with HMRC. Recognition has to be applied for separately, and a charity too small to have to register with a regulator can still hold it.

Gift Aid adds a quarter to every pound donated while the basic rate stands where it does — the figure follows the basic rate and is not fixed. It is also where the risk is, because the declaration wording and the record-keeping rules are precise, and HMRC does come and look.

Look up

Glossary

Tools

  • Donor benefit calculator — Tool: planned
  • GASDS calculator — Tool: planned
  • Gift Aid eligibility checker — Tool: planned
  • Small trading exemption calculator — Tool: planned
  • VAT registration checker — Tool: planned

Templates

  • Donor benefits schedule — Template: planned
  • Fit and proper declaration — Template: planned
  • Fundraising event register — Template: planned
  • GASDS community buildings comparison — Template: planned
  • GASDS record sheet — Template: planned
  • Gift Aid declaration — Template: planned
  • Gift Aid record checklist — Template: planned
  • Gift Aid self-review — Template: planned
  • Income classification record — Template: planned
  • Trading exemption assessment — Template: planned
  • VAT registration assessment — Template: planned
  • VAT relief declaration — Template: planned

Understand

Do

Common questions

Gift Aid lets a charity reclaim the basic rate tax a UK taxpayer is treated as having paid on a donation. The donor gives money and a valid declaration, and the charity claims the top-up from HMRC through Charities Online, as Step 8, Make your first Gift Aid claim sets out.

A Gift Aid declaration gives the donor's name and home address, the charity's name, the gifts it covers and confirmation that they are Gift Aid donations. The donor also needs a full explanation of their own tax position, and "I am a UK taxpayer" is not one: see Step 4, Design a compliant Gift Aid declaration.

Only gifts of money from individuals, given under a valid declaration and not paid in return for goods, services or rights. Event and raffle tickets, most sponsorship and many membership subscriptions do not qualify, and Step 6, Classify your income for Gift Aid eligibility, works through each type.

A charity claims Gift Aid through HMRC's Charities Online service, submitting a schedule spreadsheet of donations, each matched to a valid declaration, within the time limit for its legal form. Access has to be set up first, in Step 3, Set up your Government Gateway and Charities Online access.

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