I do the Gift Aid claim for a small charity that my mother started, and I’ve just completed the claims stretching back for donations over the last 18 months. I am aware that claiming Gift Aid can be daunting, especially for volunteer run organisations: so here are my nuggets on the process.
Understanding the Gift Aid rules is important
Before attempting to claim Gift Aid, it’s critical to understand how Gift Aid works, how to claim, and what donations are and aren’t eligible. For example - donations from companies are out. Donors need to pay income (or capital gains) tax, and the donations need to be explicit donations and not payment for an item in a charity shop or where a benefit of more than 25% of the donation value is given to the donor. Click here for more information.
Get signed declarations
All donations on which Gift Aid is to be claimed need to have a signed Gift Aid declaration from the donor, either for this or previous donations. Getting the form right can be quite a hassle, but HMRC provide sample forms (see link); however, they will need to be adapted as they don’t include any space for telephone numbers, email addresses, or opt-in consent. As the HMRC form is a PDF, you will need to adapt the HMRC version for your charity by re-typing it into Word or a desk top publishing package. Once you have the customised declaration for your charity, every donor needs to sign one.
Getting an HMRC login and password is a job in itself
All Gift Aid processing happens via the HMRC online portal, and you’ll need to have an account to use it. The first step in getting a login is to get an HMRC Gift Aid reference. Unfortunately, this isn’t the same as the Charity Commission number (that would be too simple). Once you’ve obtained a Gift Aid reference, apply for a user ID which arrives in the post. Logging on this time, I had forgotten both my user ID and password; I had to provide them with my HMRC tax reference and the last four digits of the bank account to get a new one (that will teach me to lose the password!).
The forms are clunky and awkward
To claim Gift Aid, you need to complete a specially designed HMRC Gift Aid reclaim spreadsheet. The only problem with it is that it’s a bit clunky – the column width won’t change, so the dates become hashes. This isn’t a problem really, until the application process asks for the date of the earliest donation – and that is the hashed out column.
The screen grab below shows the hashes and the clunky column widths with hanging letters:
Who cares about capital letters? Not me
Entering Gift Aid donors’ details is a pretty time consuming and boring process. A person’s name and postcode contain quite a lot of capitals so I speeded up the process by being grammatically poor and giving up on capital letters.
Being a tech genius, I thought I had foxed the HMRC system – until, that was, I submitted my spreadsheet and the system decided the lack of capitals on the postcodes was an error! Not such a genius after all. Luckily I worked out a way to convert the lower case to capitals in Word rather than rewriting them all. Anybody who thinks the Gift Aid Small Donation Scheme (GASDS) might bypass some of the bureaucracy should read my blog on the topic here.
Reading handwriting isn’t always easy
All the forms I completed were hand written, and it’s not always easy to read peoples hand writing - so if there was any way to get people to type their forms, I would go for it. Unfortunately in my case there isn’t it. It’s probably worth encouraging donors to fill out forms in BLOCK CAPITALS in future.
Gift Aid claims are more fun in a double act
Each donation needs to be entered on the spreadsheet separately – so unless you’re an organisation with a database of details you can export directly on to the HMRC spreadsheet, it’s a pretty slow process. I roped in my wife to help on a sunny Sunday morning, and she read them out while I typed - it was definitely quicker, but whether it was twice as fast I don’t know.
Five hours to reclaim over £400 is time very well spent
Gift Aid reclaims are rather like tax returns for me: anticipating doing them is worse than actually doing them. I input around 150 donations this time, and I reckon it took me about 5 hours of work (including my wife’s time). Our claim, if accepted, should bring in over £400 or £80 an hour for the charity. There aren’t many other ways a volunteer could raise so much money in so little time.
So gift reclaims are bureaucratic, frustrating, and boring - but absolutely worth it for a small charity to do.
This blog should be required reading for all HMRC staff who process claims from charities.
I think it fair to point out that you don't need the donor's signature as such - but their declaration - which can acknowledged by a tick box. It is a common misconception that a signature is needed.
Unfortunately you refer to all donors signing their claim - it is not necessary but their approval is - either by them completing a form or a recorded phone call.
Otherwise a helpful article.
Whilst I found your nuggets very interesting, there are a few points which I would like to pick up on.
You state “All donations on which Gift Aid is to be claimed need to have a signed Gift Aid declaration from the donor,..” Many charities fundraisers and donors believe this, but in fact HMRC guidance specifically states “ ... there’s no requirement for a declaration to contain a signature and so the ‘signature requirement’ can be removed if you wish.” A Gift Aid Declaration can also be made orally, without the donor every having the need to commit anything in ‘writing’ either in the conventional sense, or electronically.
HMRC have also adopted the open data format (.ods ) as one of its method of submitting a claim. Whilst HMRC encourage direct inputting into this file, it is possible to capture your donations in a standard Excel spreadsheet and then simply copy and paste the data in. Naturally you will need to have the same column headings. Also, it seems quite tolerant, as when I tried it, it accepted dates such as 12/01/2012 quite happy and also converted 12/Jan/2012 to 12/01/12.
Whilst Gift Aid can be daunting, so can everyday activities as crossing the road, especially if you don’t know all the rules and regulations – just think of the last time you tried this in Europe. Gift Aid is actually quite straight forward, and you can always err on the side of caution – remember that you have at least 4 years to claim so you can leave it while you check you have it all correct. And when you do finally claim, HMRC will pay you interest for the time they have had your money.
So I don’t think one should be frightened of Gift Aid or avoid claiming because you think it is too difficult. Remember, great things can often be achieved, not by fantastic innovation or extraordinary skill, but by doing the ordinary things properly.
Can I ask a really basic question? I already have a Government Gateway account in my own right as I was self employed for a while.
I understand that I need to register the Charity I volunteer for with HMRC but do I also need to ask them to create a separate Government Gateway account for the charity or can I upload the Gift Aid information whilst logged into their system as me.
I hope that makes sense!
I seem to recall, when I first became self-employed that there was a bit of a delay whilst codes and goodness knows what went back and forth in the post and want to avoid doing anything I don't need to do!
Thank you :)