Changes to Gift Aid: guidelines for charities
HMRC has updated its guidance notes for charities benefiting from the Gift Aid scheme, whereby a charity can claim UK basic rate tax on donations made by individuals. Thus, a donation by a taxpayer of £100 prompted extra Gift Aid from the government of £22 up until 5 April 2008.
These rules have been complicated by the reduction of the basic rate band from 22% to 20% (from 6 April 2008), which means charities will receive less of the tax equivalents of donations from HMRC. However, there are transitional provisions in place for Gift Aid donations which are made to a charity or Community Amateur Sports Club (CASC) in the tax years 2008-09 to 2010-11 (i.e. between 6 April 2008 and 5 April 2011).
Organisations should submit their Gift Aid repayment claims to HMRC using the 20% basic rate. A transitional relief supplement of 2% will then be applied in the calculation. Charitable trusts will receive payment of the transitional relief supplement for up to two years after the end of the tax year to which the repayment claim relates, and charitable companies and CASCs will receive the supplement for up to two years after the end of the accounting period to which the repayment claim relates.