What the donor needs to do

The donor must:

• have paid at least as much in Income Tax or Capital Gains Tax in that tax year as you want to claim in Gift Aid
• make a Gift Aid declaration that gives you permission to claim it.

Gift Aid can be claimed on donations of money made by an individual UK income taxpayer. It’s an easy way to help SSAFA maximise the value of donations.

To claim Gift Aid, you’ll need to ask donors to make a Gift Aid declaration.

If any donor or person connected to the donor benefits significantly from their donation, it doesn’t qualify for Gift Aid.

Higher rate taxpayers

High-rate taxpayers at the higher or additional rate, can claim the difference between the rate they pay and basic rate on their donation. They can do this by either:

• Self-Assessment tax return
• by asking HM Revenue and Customs (HMRC) to amend their tax code

Example If a high-rate taxpayer donates £100 to SSAFA  the charity will claim Gift Aid to make their donation £125. As the high-rate taxpayer pays 40% tax, they can personally claim back £25.00 (£125 x 20%). Donors can choose to donate this rebate back to the charity. The donor can choose to donate this rebate back to SSAFA.

Gift Aid Declarations

To claim Gift Aid, you need to get a Gift Aid declaration from the donor. It should say that the donor:

• has paid the same amount or more in Income Tax or Capital Gains Tax in that tax year.
• agrees to Gift Aid being claimed.

You must keep a record of declarations for 6 years after the most recent donation you claimed Gift Aid on.

Gift Aid declaration forms

The declaration must include:

• name of the charity
• donor’s name (first and last name)
• donor’s home address (at least their house number or name and postcode)
• donation date

When Gift Aid can’t be claimed

You can’t claim Gift Aid on:

• payments for goods and services
• donations of money from a company
• gifts made on behalf of other people, for example, a membership subscription paid on behalf of somebody else.
• gifts that come with a condition about repayment
• gifts that come with a condition that the charity buys goods or services from the donor.
• payments received in return for goods or services for example admission to a concert or a fee for a sponsored challenge.
• a ‘minimum donation’ where there is no choice about payment.
• gifts made using charity vouchers or charity cheques.

Keeping records

You must keep all documentation related to claims.

• the donor’s dated Gift Aid declaration.
• Information on the donation  when received and the channel (e.g., cheque, cash)

It is recommended that the charity keeps records of staff and volunteer training and guidance, to prove that they’re implementing the process correctly.

Sponsored challenges

If your Branch/Division/Serving Community Team organises fundraising events such as marathons or treks abroad, you may be able to claim Gift Aid on sponsorship that participants raise.

All sponsorship payments are eligible for Gift Aid if participants pay the cost of flights and accommodation themselves.

Example:

A donor signs up for a sponsored bike ride in France which costs £1,500 for flights and support costs. The charity asks the donor to raise £2,500, of which £1,000 goes to the charity.

Where sponsorship payments are eligible for Gift Aid, sponsors must make a valid Gift Aid declaration.

The deposit or registration fee that participants are asked to pay in advance of a sponsored challenge is not eligible for Gift Aid.

If a sponsor is connected to the participant, their donations only qualify for Gift Aid if the participant pays the full cost of the trip so that all the sponsorship money raised goes to the charity.

A ‘connected person’ is:

• a wife, husband or civil partner
• a child, brother, sister, parent or grandchild
• the wife, husband or civil partner of a relative
• a company under the control of the donor, or under control of connected persons

HMRC recognises that SSAFA cannot be expected to check whether a participant and their sponsors are connected. But you should take reasonable steps to ensure that Gift Aid payments are not received from people or companies connected to a participant. You can do this by including an explanation in any event literature and on the sponsorship form.

Church collections

You can’t claim Gift Aid on donations collected in your church that will be passed directly to SSAFA. This is because the money collected is not part of the church’s income.

If a church chooses to set up a fund to raise money for SSAFA, then the money collected forms part of the church’s income. In this case, the church (which is a charity in its own right) must claim any Gift Aid due.

Charity events

If you sell tickets to an event you’ve organised, e.g., a concert or fundraising dinner, payment does not qualify for Gift Aid. Even if the ticket price is higher than the cost of the event, the money made from ticket sales counts as profit and not a donation.

To qualify for Gift Aid, a payment must be a voluntary donation and not be a compulsory payment for attending an event.

Minimum donation payments do not qualify for Gift Aid. But if someone chooses to pay more than the minimum donation, the extra amount paid qualifies for Gift Aid.

If you set a ticket price for an event and ask for a suggested donation, the donation is eligible. You must make it clear to people buying a ticket that they can attend without donating, but you mustn’t give preference to those who do give a donation.

If you arrange a ‘donation only’ event where people can attend whatever they decide to give (including making no donation), then all donations would qualify for Gift Aid.

Expenses paid to volunteers.

If the expenses are reasonable, you can reimburse a volunteer for costs they have had to pay because of their work, e.g., train fares.

Once you pay a volunteer, they can keep the money or pay part or all of it back to SSAFA as a Gift Aid payment.

Gift Aid only applies when the volunteer makes an actual payment of money to SSAFA. You can’t claim Gift Aid if a volunteer decides not to claim for expenses that they’re entitled to.

If you pay expenses to a volunteer which are higher than the costs incurred, the payment may be taxable as employment income if it can be shown that they’re employed. If this can’t be proven, the payments may be chargeable as a miscellaneous receipt.

Charity auctions

When the retail value of an item bought in a charity auction exceeds the benefit limits, detailed below, Gift Aid can’t be claimed.

It is possible for the donor’s payment to be split between an amount to ‘buy’ the item and an amount that can be treated as a gift. To do this the value of the item auctioned is subtracted from the amount paid. The remainder is treated as a donation that can qualify for Gift Aid. You must make the value of the item clear to bidders at the auction before each item is sold.

For an item that’s not commercially available, supporters at a charity auction may pay more than its retail price to increase their donation or because the item is unique. The commercial value of a football shirt, for example, is increased if it’s signed by the football team. The benefit for Gift Aid purposes is the amount it fetches in the auction.

The benefit is calculated as follows:

Donations Maximum value of benefit

• up to £100 25% of the donation
• £101 - £1000 £25
• £1,001 and over 5% of the donation (up to £2,500)

When the donation exceeds the benefit limits

When the value of the benefit exceeds the limits in the donor benefit rules, the donor can ‘buy the benefit’.

For the donor to ‘buy the benefit’, and enable you to claim Gift Aid, you must make them aware of the retail cost of the item (the value of the benefit) and that they can buy the item elsewhere when they make their successful bid (donation).

This ‘excess donation’ qualifies for Gift Aid.

In some cases, supporters can bid on services that donors promise to conduct for successful bidders, like a massage or childcare. To be eligible, the amount that the successful bidder pays for the ‘promise’ is the same as the value of the benefit. If a ‘promise’ is commercially available, the value of the benefit is the same as its retail price.

Selling donated goods on behalf of individuals

This process is not exclusive to charity shops. It can also apply to donated goods sold on the internet or at a public auction.

Money raised by selling donated goods like clothes does not qualify for Gift Aid. You need to explain to owners of donated items that the shop, auction or website will function as their ‘agent’ to sell goods on their behalf if the owner will give the sale proceeds (minus any commission charged) to the charity as Gift Aid donation.

If you run a charity shop, staff and volunteers must explain the arrangements before donors complete a form appointing you as their agent.

The owner has the right to keep all the proceeds from the sale of their goods. They can choose to donate all or part of the amount. You can claim Gift Aid on the agreed amount after any commission (including VAT) has been deducted.

The owners of donated goods will usually make a Gift Aid declaration when they ‘sign up’ for the scheme before their goods are sold.

How to reclaim Gift Aid via HMRC

Firstly, register your Branch with HMRC https://www.gov.uk/charity-recognition-hmrc

You can then reclaim Gift Aid online via Charities Online. You will need to apply for an account and have eligible software, like a database and a spreadsheet of your donations. For claims of over 1,000 donations, you must use software. To apply by post use form ChR1, which you can get from the charities helpline.

How you can make Gift Aid claims through Central Office

SSAFA Central Office already claims Gift Aid for some Branches/Divisions/Serving Community Team. If you choose to make your gift aid claims through the fundraising department at Central Office, we will need to know the following in writing:

1. Date the donation was made.
2. How the donation was made (cheque, cash, BACS, credit/debit card)
3. Donation Amount
4. Please send copy of the donors’ Gift Aid declarations (keep all original copies for your auditing purposes). You only need to send one declaration per donor to cover all future donations if the gift aid is not one-off.

If we already hold a copy of the donors’ declaration, you do not need to send us another. But, please let us have their full names and postcode so that we can track them on the database.

Please send your Gift Aid claims to Central Office on a quarterly basis, based on the SSAFA financial year (Jan-Dec). For Gift Aid related to sponsorship donations, please send these once the event is closed and the event participant has sent you all the forms pertaining to the claim. Ensure that you have cross-checked the income you’ve received against the sponsorship forms.

We aim to process all claims within two-weeks of receipt. The gift aid funds can be sent to you by cheque or BACS. Please let us know which you would prefer. To follow-up your claim, please call 020 4566 9140.

Please send your Gift Aids claims to: John Afful, SSAFA, Queen Elizabeth House, 4 St Dunstan’s Hill, London EC3R 8AD

The Gift Aid Small Donations Scheme

The Gift Aid Small Donations Scheme (GASDS) should not be confused with Gift Aid.

GASDS is an allowance available to a charity which has collected small cash donations where it has not been possible to claim Gift Aid, for example by a street collection. There is a limit of £1,250 per charity (the gift aid on £5,000 cash).

The rules clearly state that where charitable entities are connected (e.g., Branches/ Serving Community Teams and SSAFA) only one claim by the entire organisation can be made. Branches, divisions, and committees should therefore not attempt to claim this allowance as this will result in claims more than our entitlement and penalties to SSAFA and interest may be levied by HMRC. As the limit is relatively small, the full amount available to SSAFA via the GASDS will be claimed centrally on street collections made by the Central Office team. Branches, divisions, and committees should therefore not attempt to claim it.

Resources

1. Gift Aid donation envelopes: you can request for small gift aid envelopes from SSAFA Marketing Hub (https://www.ssafa.online/log-in).
2.  The SSAFA Gift Aid declaration form can be downloaded from SSAFA Net - https://ssafa365.sharepoint.com/Shared%20Documents/library/fundraising/fundraising-branch-gift- aid-declaration.pdf