Gift Aid and the small donations scheme

Gift Aid

Churches are regarded as charities and within a certain set of rules can claim back Gift Aid resulting in 25p being recovered every time an individual donates £1.  Resources are available to help parishes claim Gift Aid from HMRC using one of the three processes that were introduced in 2013:

• The ChR1 paper form
• Online Claims
• Claiming using commercial software

Gift Aid claims now require more information about the donor than previously, so you will need to check your records, and if you have more recent information regarding the donor’s name, address and postcode, then you should update this form:

Gift Aid form | DOCX

It is now possible to collect Gift Aid declarations verbally and by email and the guidance is here:

Gift Aid Verbal Form | PDF

Gift Aid Guidance | PDF

It’s important to check periodically that you’re operating the Gift Aid scheme in line with good practice, and there is a simple checklist to help you ensure you are adopting good practice:

Gift Aid Checklist | PDF

One of the most important things to do each year is to remind your donors to check that they are still taxpayers, and notify you if they are no longer paying sufficient tax – the personal allowance has risen in recent years, taking a number of people on lower incomes out of the tax bracket. Full details and links to helpful information can be found on:

Parish Resources | Weblink  

Gift Aid Small Donations Scheme (GASDS)

The Gift Aid Small Donations Scheme (GASDS) allows parishes to claim a Gift-Aid style repayment to be received on small cash and contactless donations of up to and including £30 to a threshold of £8,000 of donated income per tax year per church. (The £8,000 threshold applies from the 2016/17 tax year – the limit for prior years was £5,000).

In total, it should benefit parishes by more than £15 million a year.  The guidance on this page offers practical guidance for Church of England parishes – it does not provide complete guidance to the scheme. There are two different elements to the scheme:

1.  If you are a PCC with a single church, then you should now use the Top Up element of the scheme.  (You should also use the Top Up element if you have more than one church building in the parish, but your eligible donations in total are not more than the £8,000 limit).

Single church parish guidance | PDF  

2.  If your PCC has more than one church, then you should continue to use the Community Buildings element of the scheme.  If you have a church plant, or run services in other buildings, there is an additional guide to GASDS and Church Plants.

Multi-church parish guidance | PDF

Church plant guidance | PDF

Whichever guidance you are following the core of the scheme is simple to operate, and we’d encourage parishes to keep it that way. Don’t try and do anything different to change how much qualifies – for many parishes, loose plate collections and regular giving envelopes on which there is no Gift Aid declaration will form the basis of your claim. GASDS is claimed alongside Gift Aid using the same processes. These changed in 2013, and guidance is found above on how to claim.

Update on GASDS while Church Buildings are not fully open

HMRC have issued the following statement about GASDS while church buildings are not fully open:

In respect of GASDS, guidance on the eligibility for donations for inclusion in this scheme is clear in stating that claims can only be made on cash donations of £30 or less; and contactless card donations of £30 or less collected on or after 6 April 2019. The decision over what constitutes an eligible donation is one for the church/charity to make for themselves, rather than for HMRC, but the conditions for something to be considered a ‘small donation’ are clearly set out in legislation. Where it is the case, for example, of separate donations being given in a single envelope, then if the church/charity official is happy these are clearly separate ‘small donations’ (and clearly stated as such) then they will be eligible for GASDS, as is the case where separate envelopes are used.

1. Churches could also help to make it easier to distinguish such gifts by providing separate collecting plates/donation receptacles reserved for saved-up donations when the lockdown restrictions are eased.

FAQs

1. Can we include small donations received at services with fewer than 10 people? Yes, for donations received after April 2017, but not prior to this.
2. How will I know whether say, a £20 note and a £10 note are part of the same gift? The donation should only be disregarded as being over £20 (£30 from April 2019) if you have evidence to show this – if for example, there was a £50 note (a very rare sighting on a church collection plate!) or the notes were contained in an envelope, or banded together. Otherwise you can assume that cash donations collected on a plate or in a bucket from several individuals are eligible.
3. Does this remove the need for one-off Gift Aid envelopes? No. Some donors will want to be able to give even small donations through Gift Aid, and if a church receives more than £8,000 of small donations, then if some are given under Gift Aid it allows the church to reclaim a higher amount overall. One-off envelopes should still be available for those who wish to give more than £20 (£30 from April 2019), particularly during a Gift Day when larger donations might be expected.
4. Is a gift of £20 or less (£30 from April 2019) in a regular giving envelope on which no Gift Aid declaration has been received eligible for the scheme? Yes, although it is always good practice to encourage givers to complete a Gift Aid declaration if they are eligible to do so, particularly those who give regularly.
5. What about collections received which will be given to other charities e.g. Christingle? The PCC can only claim on up to £8,000 of eligible donations. If it receives more than this, it can choose which donations to claim on. If it chooses to include donations that will be passed onto another charity, these form part of the PCC’s £8,000 limit. In principle, the GASDS claimed on them should also be passed on, as is the case with Gift Aid.
6. Are we able to claim on cheques and standing orders? Cheques and standing orders are not eligible, nor are text, chip and pin or online giving methods.  You can claim on cash and contactless payments.

What you need to do now

You need to make sure you’re keeping the right records. HMRC require you to keep three elements of evidence, all of which you should already have in place:

To be eligible, Small Donations must be banked at bank or post office branch in the UK. You must keep evidence to show that you have deposited at least the amount claimed under GASDS. So, for example, if after a service you have £250 which is eligible for the small donations scheme, the amount banked must be at least that. In practice, because of cash in Gift-Aided planned giving envelopes it will be higher than that – this is fine. It doesn’t need banking separately.

You will also need records showing when the cash was collected. For most parishes, this will be in two parts, as outlined in our guidance.

a) Vestry forms showing the cash collected at services, which provides evidence of the donations that are eligible. These should be signed. You can use your own forms, if they separate out loose cash from that given in envelopes and can exclude donations where you know than an individual gave more than £30.

An example form is available:

Vestry Form | DOCX | XLS

b) The envelope register, which will identify regular planned giving in envelopes not covered by a Gift Aid declaration. These can also be included in the scheme provided the donation given in a particular week is in cash and is of £30 or less.

In order to claim under the Community Buildings element of the scheme (which parishes with more than one church are likely to need to do) on donations received prior to 6 April 2017, you will need evidence to show that collections were taken at services or other charitable activities when there were more than 10 people attending. This will usually be your service register.

Please note:

This information is intended as guidance only. You should consult HMRC or other professional adviser if you are in doubt as to the Gift Aid regulations.

Updated 2 July 2020.