Gift Aid provides a great opportunity for church members to increase the value of their gift to the Church.  Provided donors are taxpayers, paying tax on income, savings or capital gains, the Church can reclaim from the Inland Revenue the basic rate tax paid on their gifts, boosting the donation by 28%.  So a gift of £100 is worth £128.21 to the Church.

Subject to a few simple rules, church members can give any amount of money, large or small, regular or one-off, and the Church can reclaim the tax.  Payments can be made in cash, by cheque or standing order.

Anyone wishing to use Gift Aid has to complete a simple declaration saying that they are a UK taxpayer and want to use Gift Aid.  A declaration can be backdated to cover all donations since 6^th April 2000 when the scheme started and is valid until the donor cancels it.  

How does Gift Aid work?

A net gift to the Church of £100.00 is paid from gross income of £128.21.  For basic rate taxpayers, the income tax deducted is £28.21 and it is this sum that the Church can reclaim from the Inland Revenue.  Therefore the increase in the value of the donation is equivalent to the basic rate tax deducted from gross income.

What about people paying tax at the lower rate of 10%?

People paying the lower rate of tax can also Gift Aid donations as long as they pay an amount in tax in a year, equivalent to the amount of tax reclaimed by the Church.

What if people pay tax at the higher rate?

The Church can only reclaim tax at the basic rate, currently 22%, and higher rate taxpayers can claim relief on the difference between the basic rate and higher rate of tax.  For example a net donation to the Church of £100.00 is enhanced by £28.21 when the Church reclaims the tax and the donor can claim marginal tax relief of £23.08 making the final cost of the donation £76.92.  For the donation to ‘cost’ the higher rate taxpayer £100.00, the initial gift would need to be £130.00.  In this case the Church would reclaim £36.67 and the donor reclaims marginal tax relief of £30.00.

What happens if insufficient tax is paid?

It is the donor’s responsibility to make sure that they pay sufficient tax to cover the sum reclaimed in a tax year.  However if the Inland Revenue finds that a donor has paid insufficient tax during an Inland Revenue audit of the Church’s Gift Aid records, the Church will be given the opportunity to refund the tax without going back to the donor.

If the insufficiency is found during an inspection of the donor’s tax affairs, then the Inland Revenue will reclaim the unpaid tax from the donor.

Make the most of Gift Aid

Anyone who is a UK taxpayer wanting to make a gift, either on a regular basis or as a one-off payment, should consider using Gift Aid.  This allows the Church to reclaim the tax that has already been paid on the donation.  The Gift Aid Secretary or Church Treasurer will be able to give you more information about Gift Aid and give you a declaration form to complete.  If you are making regular gifts to the Church, you might also want to consider paying by standing order or through an envelope scheme.  The Gift Aid Secretary should be able to give you details about both these payment methods.

If the gift is a ‘one-off’ payment, this should be placed in a special envelope, which has a declaration and space for name, address, the date and possibly a signature. 

Information for Gift Aid Secretaries and Treasurers

Using Gift Aid means that the Church can enhance the donations received from UK taxpayers by an extra 28 pence for every pound received.  Reclaiming the tax is straightforward and the Inland Revenue will either send you a cheque or pay the money directly into the PCC bank account.

The tax can be reclaimed once a giver has completed a Gift Aid declaration.  The Inland Revenue also require that records are kept of all donations received under Gift Aid in such a way that they can be linked back to donor and the declaration. 

For more information about processing Gift Aid click on A Guide to Gift Aid

For a summary of the responsibilities of a Gift Aid Secretary click on
Gift Aid Secretary Role Description.

Keeping Records for Gift Aid

There are two key elements to Gift Aid records:

• A Declaration which is made by the donor, and kept by the Church’s Gift Aid Secretary or Treasurer: and
• An ‘audit trail’ – the ability to check that the donations being claimed for by the Church, have actually been made by the giver.

With these in place the way is clear to add 28 pence to every £1.00 donated to your Church by reclaiming the tax from the Inland Revenue.

For a sample copy of the Gift Aid Declaration click here.

For a sample copy of the bank standing order mandate click here.

More information about record keeping and sample forms can be found in the guide to processing Gift Aid.

The guide to processing Gift Aid assumes that paper records are used.  However, there are several software packages available to help with the administration of Gift Aid.  The programmes offer record keeping for all Gift Aid donations and will prepare the Inland Revenue forms.  They will also allow you to export information to Word or Excel for receipts and ‘thank you’ letters. 

Here are some examples (some specifically for churches and some more general) and others can be found on the Internet at
www.itforcharities.co.uk/gaidsw.htm.

Gift 2002 from Data Developments at
www.data-developments.co.uk

GATS (Gift Aid Software) from Cleaford Services Ltd at
www.cleaford.co.uk

Visual Gift Aid from Westwood-Forster at
 www.westwood-forster.com  

A simpler spreadsheet is available from Stewardship Services at    
 www.stewardshipservices.org

Some Practical Ideas for Promoting Gift Aid

• Leaflets either in the pews or at the back of church.
• Gift Aid envelopes and pens in every pew.
• A poster on the notice board.
• An article in the parish magazine. 

Examples of the above can be found under Christian Stewardship Literature

It is possible to produce localised envelopes on a home computer or they can be purchased from one of the specialist envelope companies listed below.

• Envelope Systems - www.envelopesystems.co.uk
• Donation Envelopes – www.donation-envelopes.co.uk
• Lockie Limited – www.lockie.net
• Stewardship Services – www.stewardshipservices.org

For more information about Gift Aid contact Ann Fryer, Parish Gift Aid Adviser on 01962 624762 or by email at ann.fryer@chsewinchester.clara.net

The Inland Revenue Charities Department also has a helpline and website, which allows you to download the relevant documents.

Gift Aid Helpline: 0151 472 6038/6055/6056
www.inlandrevenue.gov.uk/charities

And there is a simple Gift Aid calculator that works out the total value of the donation and the tax due at
 www.itforcharities.co.uk/gaidcalc/simple.htm