Claiming gift aid can seem quite tricky when you don't know the ins and outs. In this article, we unpack what exactly gift aid is, who is (and isn't) eligible for gift aid, and what is required before you can claim it. We also detail the full process involved in claiming gift aid and how much it's worth to charities.

What is gift aid?

The Gift Aid scheme helps charities and CASCs (Community Amateur Sports Club) benefit more from the generosity of their donors. These entities can claim as much as 25% extra for each donation. For example, a £20 donation would result in the charity receiving £25 in total.

Where does this money come from? When a UK taxpayer donates to a charity or CASC, the taxpayer has already paid capital gains or income tax on this amount.

Gift Aid allows the charity or CASC to claim that amount back from Her Majesty's Revenue and Customs (HMRC). As a result, the UK charity sector gains a quarter extra of the donations they receive, adding millions of pounds to the total amount donated every year.

Who is eligible for gift aid?

• Registered Charities
• CASCs (Community Amateur Sports Clubs)

Who is not eligible for gift aid

• A person who already participates in payroll giving cannot also participate in the gift aid scheme. This is because the money that goes to payroll giving is taken off a person's income before tax.
• Non-UK taxpayers

What are the different ways that Gift aid can be claimed?

There are two ways by which charities and CASCs can claim Gift Aid: Online or via post.

To claim online, a submission must be made on the Charities Online digital service. Once your charity is recognised by HMRC and is registered for Charities Online, the claiming process is just a few simple clicks. We’ll explain how this works in the sections below.

Claims can also be made by post. To do this you will need to obtain a ChR1 form from the Charities Helpline which will have to be posted to the HMRC PO box. 

What do you need to do before you can claim gift aid?

You need to be recognised as a charity or CASC by HMRC

To ensure your eligibility to claim Gift Aid, you will need to apply to become a recognised charity or CASC by HMRC. You can do this by applying online here: Get recognition from HMRC for your charity.

If you apply for registration online or via post, you will need to create an account on Government Gateway. On the sign-in page, you will have the opportunity to select ‘create sign in details’. The digital prompts will then ask you to create a secure password before giving you a unique 12-digit user ID. Your password and ID are important, so keep note of them, as they will be required when logging in or submitting claims. 

Once logged in you will be able to submit an application to be recognised. For this application you will need to supply all the details of your charity, including the following:

• Personal details of officials (birthdates and National Insurance Numbers)
• Charity registration number (if registered with a regulator)
• Charitable objectives/Purposes
• Governing document/rulebook (explains how the charity is run)
• Government Gateway user ID and password (Once you’ve registered your charities details you can create an account)
• Bank statements

Once the application form is submitted, the supporting documents are due within 30 days of the date of application. When all documents have been received and the application is complete, you should hear back on the outcome of your application within three weeks.

If you are successful in your registration, this will mean that your charity has been successfully recognised by HMRC.

You need to Register for Charities Online

In order to make a Gift Aid claim, you will need to add Charities Online to your Government Gateways Online account. Once logged in, this can be done by navigating to ‘add a tax, duty, or scheme’, by checking ‘other tax or scheme’ and then choosing ‘Charities – for Gift Aid Repayment Claims’.

Upon completion of this registration, you will receive an activation code, that will be necessary to activate your account. Activation can be made by navigating to ‘charities’, which will be listed as one of the ‘services you can use’. Once here, it is as simple as selecting ‘activate service’, inputting your activation code, and completing the activation.

You need to have all donor information

For a donation to be eligible for a Gift Aid claim, the donor needs to have paid at least the amount of the claim on income or capital gains tax that year. On donations of £30 or more.

The donor will also need to make a Gift Aid declaration to the charity or CASC stating that they are permitting that amount to be claimed.

One way of doing this is by filling out a Gift Aid declaration form. Keeping a record of these declarations is very important. If you claim Gift Aid on donations where the donor has not completed a declaration, your charity will need to repay the tax that you have claimed.

You need to have a record of all the donations with details

When making a Gift Aid claim to HMRC, you will be required to submit a detailed record of all the donations on which you intend to claim Gift Aid repayment. This can be done by using a Gift Aid schedule spreadsheet, which can act as a guide for all necessary information required in a claim. Here is a blank copy of the Gift Aid schedule spreadsheet.

This schedule spreadsheet is suitable for claiming up to 1,000 donations. In the case where you need to submit over 1,000 donations, you will need to submit more than one smaller claim or utilize specialist software for larger claims.

Capturing and organising donation information can be a long process, so it is helpful to have this information organised in advance to prevent any delays in the claiming process. Your charity may already keep a record of all donations on an Excel sheet. These records will be extremely helpful during the claim process.   

Submit your claim

To submit a claim, you will need to log on to your account using the password and user ID that was created when you registered your charity with HMRC. Navigate to the page titled ‘services you can use’. Next to ‘charities’, select ‘access service’ and click on ‘make a charity repayment claim’.

The portal will then ask you to answer questions about your charity or CASC, and about the type of claim, you are attempting to make. You will then be directed towards a page titled 'repayment claim details', where you will be able to input the details of the donations you wish to claim. You can also attach the schedule spreadsheet mentioned above detailing your donations.

If your claim is accepted, you will receive a BACS payment within 3 weeks. Submit your claim and benefit from the generosity of your donors, plus the extra quarter made possible by gift aid. At this stage, it's recommended to learn how Gift Aid affects your tax.

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