Gift Aid Gift Aid basics 27 February Encourage tax effective giving

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1 3 Gift Aid basics 27 February 2016 Gift Aid 2016 Role of Gift Aid Secretary Basics Operating a Scheme Update on other Gift Aid issues Any questions? 4 5 The role of a Gift Aid Secretary Thank you! Ensure accurate records are kept Encourage tax efficient giving Encourage regular review Produce the claim Encourage tax effective giving Encourage giving Encourage tax payers to give by tax effective means written presentations verbal Encourage regular review & thank yous 6 7 How does tax effective giving work? Taxpayers who Gift Aid their giving get tax relief for the payments. They pay a net amount, on which they have paid tax, to the church. The church claims back the tax, at the basic rate, from HMRC Charities Requirement for donor Must be an individual, who is charged UK Income Tax and/or Capital Gains Tax for the year of donation at least equal to the tax treated as deducted from all their Gift Aid donations can be Resident or Non-Resident Donor s responsibility to ensure tax to cover Only for individuals Company donations are made gross and set against donating company s profits 1

2 8 9 Requirement for charity #1 The charity must hold a valid Gift Aid Declaration for every Donor included in the repayment claim Declaration must contain: Donor s name Donor s full home address POSTCODE Church s name Statement identifying which donations are covered Confirmation that donations are to be treated as Gift Aid donations Note explaining tax requirement Also Donor s signature Date of declaration Identifying relevant donations Use one of: 1. The donation of I made to you on dd/mm/yy 2. The enclosed donation 3. All donations I make under the Standing Order mandate below 4. All donations I make on or after the date of this declaration 5. All donations I have made since dd/mm/yy and all donations I make from the date of this declaration until I notify you otherwise 6. All donations I have made for the four years prior to this year and all donations I make from the date of this Declaration until I notify you otherwise Confirmation that donations are to be treated as Gift Aid donations: Please treat the enclosed Gift as Gift Aid donations I want my donations to be Gift Aid donations Tick here if you want to Gift Aid your donations Note explaining tax requirement NEW version I am a UK taxpayer and understand that if I pay less Income Tax and/or Capital Gains Tax than the amount of Gift Aid claimed on all my donations in that tax year it is my responsibility to pay any difference. Use new wording from 6 April Start now. No need to get replacements for current enduring declarations Previous tax warning 1 January 2013 to 5 April 2016 I confirm I have paid or will pay an amount of Income Tax and/or Capital Gains Tax for each tax year (6 April to 5 April) that is at least equal to the amount of tax that all the charities or Community Amateur Sports Clubs (CASCs) that I donate to will reclaim on my gifts for that tax year. I understand that other taxes such as VAT and Council Tax do not qualify. I understand the charity will reclaim 25p of tax on every 1 that I have given. This wording MUST have been used from 1 January

3 14 15 Declarations can be made: In advance of the donation At the same time as the donation Up to four years after the donation For payments made on or after 1 January 2012 In the following ways: In written form or by ticked box Recording or donor confirmation of pre-recorded declaration Computer Declaration template linked to donors banking details ed copy of Declaration Computer screen print of Declaration Scanned image of Declaration Mobile phone text message confirmation of declaration Confirmation donor has been sent written confirmation of auditable Declaration 16 HMRC model declaration Declarations available: One-off donation Gift Aid envelopes Cream Declaration to cover all giving - enduring Cream Declaration with Standing Order form Blue Declarations for single enclosed donation Envelopes with Declaration for single donation, including baptisms, funerals and weddings 3

4 20 21 Sample explanation Gift Aid adds a bonus to any money you give to this Church. If you are a UK taxpayer and put your gift in the special envelope provided we can receive an extra 2.50 for each 10 you give. You will need to fill in your name and home address on the envelope and sign it - but that is all. Gift Aid is a scheme that allows any charity to claim a refund of tax the donor has paid on the money donated. You must be a UK taxpayer and understand that if you pay less Income Tax and/or Capital Gains Tax than the amount of Gift Aid claimed on all your donations in that tax year it is your responsibility to pay any difference. The completed information on the donation envelope is required by HMRC as your declaration that you wish the church to recover the tax. The Church will regard your donation and declaration as confidential. Thank you New sponsorship Declaration Declaration 2 Is the declaration valid? No Declaration 3 Is the declaration valid? Yes, but 27 Declaration 4 Is the declaration valid? Looks good but no Written statement to validate Declaration: Information provided by donor in declaration: Name and address of donor Name of the church Confirmation that donation to be treated as a Gift Aid donation The donations the declaration covers Note explaining tax requirement Date on which written statement sent out Note explaining 30 day cooling off period 4

5 28 29 Example written statement Full name & address & Postcode Dear. Date Thank you for giving to the church and for agreeing, on././., that the church can reclaim tax on all your donations. You must be a UK taxpayer and understand that if you pay less Income Tax and/or Capital Gains Tax than the amount of Gift Aid claimed on all your donations in that tax year it is your responsibility to pay any difference. The church will reclaim 25p of tax on every 1 that you have given. You may cancel this arrangement in writing within 30 days and, if you do so, it will be as if this agreement had never been made. The church will keep a copy of this letter. Yours sincerely What happens when things change? Donor can cancel at any time Cannot be made retrospectively, unless Concerns a written statement AND Within 30 day cooling off period Takes effect on date of notification, or later date as specified by donor Declarations for one-off gifts can t be cancelled Any amendments to names or addresses should be kept with the Declaration Questions Requirement for charity #2 Audit trail for each donor showing receipt of the donation through the church s books and records to the bank statements Records needed for Gift Aid Declarations including tax warning Donation records Cash book Paying-in book Bank records Envelope register Sample of envelopes month each year Correspondence and literature Cancellations Record of any benefits Keep for 6 years Donor Register The donor s name The donor s full address, including postcode The date of the Declaration The date the Declaration was valid from The method of donation Envelope, plus the number Standing Order Cheque Occasional donation envelope or a combination of these. 5

6 The Gift Aid Small Donations Scheme (GASDS) only applies to cash donations of 20 or less. 50 notes and cheques should be recorded in the right hand column. Any donations that are know n to be over 20 from an individual donor (e.g. tw o 20 notes in an envelope, or secured w ith an elastic band) should be recorded in the greyed cells. 29/02/ St Church on the Hill, Hillytown Collections on:.. Attendance 10 or more? Y / N 35 Vestry procedure: best practice Potential Small Donations Scheme Gift Aid Envs Other Envelopes Mission Envs Include: loose plate offerings and donations Eligible Not eligible Notes Count immediately after service 2 people. Both to sign. Count loose offerings separately. Analyse cash. Separate Gift Aid & non-gift Aid envelopes (if known) Mark envelopes with contents If cheque, mark envelope with cheque Balance total envelope cash with total on envelopes Total all offerings Record in Parish registers Reminder: Keep 1 month s sample, marked contents Sample vestry sheet, small church Coins p p p 11 5p 12 2p 13 Tot Tot 1p 14 Total cash 15 All Monies Cheques Tot Notes 20 TOTAL Gift Aid envelopes (1-15) Other envelopes (16-25) Mission envelopes Loose money / donations - GASDS eligible Loose money / donations - not GASDS eligible Other. Other. TOTAL COLLECTIONS 10 5 Coins p 20p 10p 5p 2p 1p Total cash Cheques TOTAL Signed and WEEKLY INCOME RECORD St Someone, Somewhere Date: 27 September 2015 Sample income sheet, large church 1st 2nd 3rd Service Service Service Total Collections Gift Aid Envelopes to 100 Other Envelopes to Building Fund Gift Aid Envelopes to Donation - Unrestricted Funeral/Wedding Collections 5.00 Donation - Restricted.. Building Fund Leprosy Mission Funeral/Wedding Fees Other Income: Magazines Hall Rent Envelope Register #1 Name on Declaration = name on envelope list = taxpayer 1 January to 5 April 2015 Envelope Week 1 Week 2 Week 3 Week 4 Week 14 Total No. 04/01/15 11/01/15 18/01/15 25/01/15. 05/04/ Total Income Expenses Weekly Totals: Organist Miss Jones - Sunday School Expenses Total banked Signed Standing Order records For Standing Order payers, check bank statements Check names match Declaration Record dates received Record amounts received 2015 Standing Order Payment Control Donor Standing Jan Feb Mar Apr Tot Apr May Jun Jul Dec Total order P Black 10 pm Jan 4 Feb 6 Mar 3 Apr 6 Oct 6 Jun C Brown 25 pq Jan 25 Apr C White 50 per half yr 7 Mar 214 Total

7 41 Donations Register Other funds / one-off envelopes / extra donations etc Year 2015 Apr to Dec Gift Aid basics: part 2 27 February 2016 Donor Date GAD Method of Total Valid from Payment 12/04/15 19/04/15 26/04/ /12/15 A Davies 06/04/2000 Env (15) S Jones 06/04/2005 Chq K Smith 26/04/2015 Env GAD Weekly Totals Claiming under Gift Aid Claim on accounting year (31 December) Details needed for each donor: Name Date of donation, or last date if more than one donation Total amount of donation(s) Address details use Electoral Roll (last revision 2013) Donor Claim Summary Donna Smith Jan Apr 2015 Method Amount Last donation date Env /03/2015 SO /04/2015 Occ envs /02/2015 Total /04/ Claim summary Gift Aid claim for period to 06/04/ /12/2015 Envelopes Standing Mission donations Orders Other Final claim Name No Amount Last date Amount Last date Amount Last date Amount Last date Total Last date Bloggs, /12/ /12/ /12/ /05/ /12/2015 Joe Hardy, Thomasina /10/ /10/2015 Jones, Elizabeth /12/ /12/2015 Windy, Geoffrey /12/ /12/ /08/2015 Diocesan scheme: donations received report

8 47 48 Claiming process Charities online Only method since October 2013 Non diocesan scheme parishes only Three options: 1. Claim using online form 2. Claim using own software database 3. Claim using a paper form Option 3 paper form For those who don t have internet access Order from HMRC Fill in by hand: one box per character For 15 donors (up to 90 with continuation sheets ChR1CS) Cannot use photocopies Automatically scanned by HMRC Option 2 software database Intended for more than 1000 donors, can be used for any number Claim directly from own internal database or system Software provider needs to work with HMRC to ensure compliance Check your software can do this You need to sign up to Charities Online Option 1 online form Up to 1000 donors per claim Sign up to Charities Online Log on to Government Gateway - once Enrol to use HMRC Charities Online Register and activate service Download Gift Aid schedule spreadsheet from HMRC Information required Field Required? Maximum number of characters Title No 4 First name or initial Last name Yes 35 House name or number Postcode Aggregated donations Sponsored event Donation date (or latest in series) Notes Yes 35 No spaces Yes 40 UK addresses only Only if claiming aggregate donation No Yes - 35 Yes or leave blank DD/MM/YY UPPER CASE Include a space Simple description. DON'T enter Yes or Not Applicable. DON'T use hyphens or full stops Amount Yes - DON'T use a sign 8

9 54 55 Aggregate claims Each Gift Aid donation not more than 20 From different Declarations Aggregated line not to exceed 1000 Sensible label on schedule eg May gifts Keep supporting documents for audit trail Not for: Donations larger than 20 Collections with no Declarations (!) Sponsored events Admissions to charity visitor attractions How to claim online Type, or Copy and paste, information into schedule spreadsheet and SAVE Log on to Charities Online Fill in details about claim Upload spreadsheet when prompted On screen message for any errors Amend spreadsheet and re-upload On screen acknowledgement of claim received Repayment paid by BACS Reminders Audit trail for each donation Itemisation of every cheque Avoid joint envelopes Joint accounts if in doubt, seek clarification Reconcile at end of period Back up computer records Declaration before claim Questions Feeling creative? Gift Aid needs a qualifying donation. These are not: The purchase of books, jumble sale items, bedding plants, food, alcohol etc Admission to events eg concerts, recitals Raffle, lottery tickets, 100 clubs Hire of own premises Gifts with a condition about repayment A minimum donation where no choice of payment Day trips, transport What is a benefit? Any item or service provided by the charity or third party to the donor or person connected to the donor in consequence of making the donation. 9

10 60 61 What is a connected person? A person is connected with the donor if that person is: the wife or husband or civil partner a relative (brothers, sisters, sons, daughters, parents, grandparents, grandchildren, step-children, step-grandchildren, step-parents and stepgrandparents, but not nephews, nieces, uncles, aunts or cousins) the wife or husband or civil partner of a relative a company under the control of the donor, or under control of connected persons Donor benefit rules #1 A donation will not qualify if: The Relevant Value of any benefits exceed certain limits OR The Aggregate Value of any benefits exceeds 2500 (from 6 April 2011) Donor benefit rules #2 Relevant Value test Amount of donation Value of benefits % of donation 101-1, ,001+ 5% of donation to max 2500 Donor benefit rules Aggregate Value Test The total value of the benefits given to the donor, or any person connected with them, must not exceed 2500 in any tax year from 06/04/2011 (previously 500 per tax year) Volunteer expenses Gift Aid Brand Gift Aid One of these must be by cheque Genuine expenses 10

11 66 67 Examples Would you like to make a donation? Thinking of supporting our work? 4 year claim back period Effective from 1 April 2010 A charity which is a Company for tax purposes must make any claim within 4 years from the end of the accounting period to which the claim relates. Churches accounting period ends on 31 st December. Donations received from 1 January 2012, claim must be with HMRC by 31 December 2016 Donations received from 1 January 2013, claim must be with HMRC by 31 December Record retention Keep Gift Aid records for 6 years after the end of the accounting period they relate to For example Claim for 2010 made in 2011, Keep the records until at least 31 December 2016 Keep enduring Declarations permanently If HMRC asks questions about claim, keep until enquiries are finished Gift Aid Small Donations Scheme Took effect from 6 April 2013 Small cash donations up to 20 Claim on donations up to 5000 per tax year = repayment 1250 Will rise to 8000 from 6 April 2016 per tax year = repayment GASDS 2 - eligbility Charity must exist for at least 3 years, and Made successful Gift Aid claims in at least 2 of previous 4 years Make successful Gift Aid claim on donations received in same tax year as GASDS claim The matching principle: Total Gift Aid donations must be at least 10% of small donations ie need 500 Gift Aid donations to claim on 5000 small donation GASDS 3 the matching principle Amount GASDS received can be ten times amount of Gift Aid payments received in tax year For example: Income: Gift Aid 400 GASDS 5000 Claim: Gift Aid 100 GASDS 1000 (= 25% 4000)

12 GASDS 4 Rules concerning: Community buildings different charity structure Connected charities preventing fragmentation Recent agreement HMRC and C of E Single parish, single church? claim on main Top up element of the scheme Multi-church parish? claim on community buildings element of the scheme DO NOT exceed 5000 per church or C of E may lose recent concession GASDS 5 what can you claim on? Single parish, single church: Eligible offerings: cash and non Gift Aid envelopes Donations in boxes, wall safes Cash donations outside the building eg home communions Multi church parish only claim on: Donations given in the building Whilst service taking place At least 10 people present GASDS 6 What should we do? Not the end of Gift Aid 2 schemes Keep Gift Aid records with audit trail Make regular (ideally annual) Gift Aid claims Ensure correct vestry procedure Decide which element use: Top up or community buildings Max claim 5000 per church GASDS eligibility Quiz Tax year Tax year Tax year Tax year Tax year Can a TopUp 2010/11Gift Aid 2011/12 claim received 2012/13 in the 2013/14 following 2014/15 tax years: payment be paid? GASDS claim made GASDS claim made GASDS claim made GASDS claim made NO NO YES YES 2015/ /17 St Somewhere's Church Vestry Record Date: Location:. Attendance 10 or more? Y / N Potential Gift Aid Small Donations Scheme Include: loose plate offerings and donations Notes Coins p 20p 10p 5p 2p 1p Total cash Cheques TOTAL Eligible Not eligible TOTAL 76 HMRC Charities Variation form: ChV1 Use to notify HMRC of: New or additional Authorised signatory ie Gift Aid sec. Change to bank account or new to BACs Changes to responsible persons Other changes First use: notify 2-4 responsible persons Sign that new GAS had read F&P guidance Notify HMRC month before claim 77 Signed... and... 12

13 78 79 Fit & Proper Persons Test Legislation introduced 2010 Ensure church funds only used for charitable purposes Good news: HMRC assumes charities do not knowingly appoint people not F&P Bad news: PCCs must demonstrate have ensured managers F&P Consequences could remove Gift Aid entitlement Fit & Proper - Terms Fit & Proper person: has not been involved in tax fraud, identify theft or any other kind of fraud is not disqualified from acting as a charity trustee or company director Applies to all managers Who is a manager? PCC/DCC members Gift Aid Secretary Those who manage significant amounts of money For example: Chair fabric committee, hall secretary NOT flower fund, coffee after church Responsible people on ChV1 will be managers What do you need to do? Each manager to sign an appropriate form An appropriate form is either PCC nomination form with wording agreed by HMRC OR Fit and proper persons Declaration Immediate action Ensure following have appropriate form: Standing committee including treasurer Gift Aid secretary Any paid or volunteer staff responsible for significant amount of spending Current action New elected PCC members use nomination form with correct wording Any other PCC members sign fit and proper persons Declaration New managers sign F&P Declaration Keep records whilst in post and 4 years All managers read F&P helpsheet requirement for authorised officials 13

14 84 85 Just text giving Contact Gordon Fath More information HMRC in gov.uk: Claiming Gift Aid as a charity or CASC Charities: detailed guidance notes particularly Chapters 3 and

15 90 91 More information Diocesan Gift Aid enquiries: Diocesan Resources Department: Diocesan website: liverpool.anglican.org/giftaid