What is Gift Aid?

Gift Aid enables basic rate tax to be reclaimed by charities registered with Her Majesty’s Revenue and Customs (HMRC) on donations they have received. 

Donating through Gift Aid means charities can claim an extra 25p for every £1 donated by individuals, at no extra cost to themselves. Charities can claim Gift Aid on most donations, but some payments do not qualify. 

A donor must make a Gift Aid declaration to enable your church to claim. This is usually done by filling in a Gift Aid declaration form for multiple donations or a single donation. Donations can be claimed from the last four years and future donations if the declaration covers this time period.

Gift Aid can also be claimed on sponsorship donations (e.g. a bike ride or walk). You can design paper sponsorship forms for this purpose using this HMRC template.

If a Gift Aid declaration cannot be completed for a digital giving device donation, a one-off paper declaration is acceptable so long as it contains the amount and the date of the donation. This downloadable template can be used at your church.

A donor’s giving will qualify if sufficient tax is paid on their annual giving within the tax year (i.e. ¼ of donations between 6 April to 5 April). This tax could have been paid on income or capital gains. It is the donor’s responsibility to inform you about any tax years where they did not pay enough tax.

Gift Aid Small Donations Scheme (GASDS)

GASDS is a Gift Aid style repayment that churches can claim on small cash or device donations of £30 or less. There is no need for a declaration to be signed by a donor.

Cash donations via numbered envelopes or on the open plate are GASDS eligible. Multiple envelopes from previous weeks can be handed in during a church service, even if this takes the donor’s total donation amount over the £30 limit. Each envelope must still have £30 or less in it, and you must have a clear audit trail supporting it (i.e. number of envelopes and the date range they covered).

Donations given via a digital giving device of £30 or less are also GASDS eligible.

The total amount of donations that can be claimed per tax year is up to a threshold of £8,000 of donated income per church, which will enable your church to claim up to £2,000 from HMRC. If it is part of a larger parish, a second church could claim an additional £8,000 (subject to terms and conditions) as a ‘community building’. This building must host charitable activities at least six times per tax year, with at least ten beneficiaries per session. For churches, employees and volunteers at a church service will count as beneficiaries.

There are specific requirements for recording the gifts received by your church and vestry/cash sheets must be completed so an accurate audit trail can be established.

Please sure make to follow HMRC’s GASDS guidance: “It is important that small cash donations are banked if your charity wants to claim a GASDS top-up. If your charity uses small cash donations to pay for expenses without banking the donations first, you will not be able to claim a top-up (GASDS) payment.” Therefore, please do not use your cash collections to reimburse expenses, or use them for petty cash before paying in the monies at your bank, building society or Post Office. 

GASDS is not a tax relief, it is a spending measure funded by the Government. It can only be claimed on donations received in the current tax year and two previous tax years. Eligibility conditions are in place and they will affect how much your church can claim. For further information please visit this section on the HMRC website.

How to claim and administer your donations

This document provides useful guidance on claiming and administering your donations, including:

• A suggested system to deal with your collections
• Record retention requirements for Gift Aid declarations and one-off envelopes, planned giving envelopes and supporting records

Gift Aid Lite

Gift Aid Lite is a free, HMRC-approved service which assists with the administration and claiming of donations made through Gift Aid and the Gift Aid Small Donations Scheme (GASDS). This is available to all churches in the Diocese of Manchester through the web-based My Giving Online donations management software programme. The diocese provides the programme, paying the monthly licence fee (normally £15 per month). It also completes the initial set-up tasks and training, and the Gift Aid Lite staff also offers ongoing support for new and existing Gift Aid Secretaries or Treasurers.

Approximately 200 churches in Manchester Diocese are members of the Gift Aid Lite scheme. During the 2023-2024 tax year, it claimed almost £800,000 of Gift Aid and GASDS on behalf of its member churches. Over the last four tax years around £2.5 million has been claimed.

Parishes joining the scheme pass a Parochial Church Council (PCC) resolution to do so. This will state that all monies reclaimed through Gift Aid Lite will be paid directly to the Diocesan Board of Finance (DBF) and then credited to the Parish Share account of the church. Alternatively, if it has a regular monthly Standing Order in place to the DBF which covers their share request in full, monies reclaimed can be sent directly to the church. The PCC must also agree to meet the full conditions of the Gift Aid Lite scheme. Where there is a major ‘one off’ appeal, and Gift Aid and GASDS is being claimed, advice can be obtained, and a special arrangement can be made for repayment.

Any church wanting to join Gift Aid Lite needs to complete an official application form. 

How does Gift Aid Lite work?

Once an application to join the Gift Aid Lite scheme has been received, each church is visited, and the current situation is discussed and assessed. Where appropriate, help and advice are given and the necessary administrative tasks are agreed upon and undertaken.

Gift Aid Secretaries (new or established) will receive full training and continual support – the Gift Aid Lite team is always available to support parishes.

Gift Aid Lite members are invited to periodic training events and receive regular communication by email or post. It is also possible for scheme members to request a personal appointment to resolve any specific issues.

Audits look at each parish’s recording systems over an agreed period, which is a particular advantage for churches that are then spared the prospect of a visit by HMRC inspectors in person.

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