HMRC has today published a new Gift Aid Declaration which all charities that claim Gift Aid will need to be using by the 6th April 2016. So what do you need to know and, more importantly, what do you need to do?
This is only a model…
First of all, it is worth remembering that this is only a model declaration – you don’t have to use it if you don’t want to. There are certain things that a declaration needs to contain such as:
- The name of your charity
- The donor’s name
- The donor’s home address
- Whether the declaration covers past, present or future donations or just one donation
- A statement that the donors wants Gift Aid to apply (could be a tick box or written or online declaration)
- An explanation that the donor needs to pay the same amount or more of UK income tax and/or Capital Gains Tax as all charities and CASCs will claim on the donor’s gifts in a tax year and that the donor is responsible for any difference.
So long as you have done these things, you can construct your own declaration. However, the model is one that has been approved by HMRC and if you wish to be certain that you meet the rules or you don’t have time to construct your own, you can use the model.
Bye, bye, VAT & Council Tax
One of the great leaps forward in this new declaration is the removal of references to Council Tax and VAT. Charities have been asking for years to remove references to these taxes as they do not count for Gift Aid purposes and although the declaration made clear that they didn’t count, it only ended up confusing donors.
This is a welcome change and will make the Gift Aid declaration shorter for donors to read and easier to understand.
A new wording for all declarations
The new wording applies to all donations – not just one off donations. So make sure that you update all of your declarations to take into account the new requirements (particularly to make reference to the fact that the donor is responsible for any difference).
You also need to make sure that you update your scripts and letters for oral declarations – again, pay particularly notice to the need to inform the donor that they are responsible for any difference.
Promote the value of Gift Aid
Another positive aspect of the model is that it is clear in promoting the value of Gift Aid. Many charities already shout about the 25% boost that Gift Aid brings to the value of a donation, but research on the Gift Aid Declaration for HMRC found that this positive message of its value had a significant impact on donors’ likelihood to claim.
In fact, research says that the more you can do to show the value of Gift Aid to your organisation in particular, the more powerful the message is. So don’t be afraid to talk about the contribution Gift Aid makes, whether that is hiring new staff, delivering new projects or new campaigns.
Start thinking about updating and printing declarations
You have till the 5th April 2016 to use up your existing stock of declarations using the old wording, but you will need to start using the new declarations from the 6th April 2016. If you do not use the correct wording your Gift Aid claims may be invalid, so don’t get caught out.
You also need to make sure that if you use any online giving platforms that you have the correct wording. Online intermediaries such as JustGiving and VirginMoney are likely to already update their websites by the end of the transition period, but if you use other bespoke portals or have your own website, make sure it is up to date.
Remember, you (as the charity) are responsible for the correct wording of the Gift Aid Declaration, so don’t just rely on the intermediaries. Check out our guidance for more information on intermediaries.
Spread the word and…
One of the big challenges will be spreading the word to small charities, so if you know any organisation that fundraises and uses Gift Aid, please make sure that they know about this change and point them to the gov.uk website for more information.
Keep in touch
CFG has concerns about the new declaration, particularly a statement for donors that they are responsible for any difference between their claims and the amount of tax that they pay in that tax year. We believe that this could be counter-productive and lead to eligible donors not claiming, because they are risk adverse, and ineligible donors claiming anyway, because either they do not know their tax status or because they don’t care. At a time when charities are facing a tough financial environment, the last thing that we need is fewer people claiming Gift Aid, but CFG will be keeping an eye on its implementation and organisations that are experiencing fewer Gift Aid claims with the new declaration, please get in touch.
New update – Concession on printed materials
Quick update for charities on the new Gift Aid Declaration – following questions by charities and churches to HMRC, it has been confirmed that charities and CASCS that hold printed materials that were ordered and printed just before the new Gift Aid declarations were published (21st October 2015) can use up their current stock of pre-printed material beyond April 2015.
This is a significant concession and will mean that charities that have spent a significant sum on new printed stocks before the declaration was unveiled will be able to use up these materials. This is a sensible and positive move.
Those charities that have printed enduring declarations, they will need to keep a record of the printing of these materials to prove that they were printed or ordered before the 21st October 2015. So don’t throw away your invoices!