Three Key Updates To Gift Aid - June 2019

#1: Increase in the individual gift limit for the Gift Aid small donations scheme (GASDS)

From 6 April 2019, the amount that a single individual can give on each occasion that qualifies for the Gift Aid small donations scheme (GASDS) increased from £20 to £30. What does this mean in practice for churches? Those that are responsible for counting cash offerings can now include three £10 notes that are in an envelope together in the GASDS claim, whereas prior to 6 April, the whole £30 would have been ineligible. The requirement is that ‘reasonable steps are taken to find out’ if a single gift is for more than £30. Subject to that, it can be assumed that the cash gifts are for less than £30 each.

Related to this, there are several other things to bear in mind:

1. The upper limit of all eligible gifts in the tax year remains at £8,000. Our Briefing Paper outlines this rule in more detail.
2. Unlike Gift Aid itself, you do not need to know who has made the cash gifts or if they are a taxpayer. But if you do know and they have given a Gift Aid declaration, you must claim Gift Aid and not GASDS.
3. The time limit for claiming under GASDS is shorter than for Gift Aid – two years from the end of the tax year (5 April) in which the gift was made, rather than four years for Gift Aid.

#2: HMRC now want you to use full donor names in Gift Aid claims

HMRC recently changed their practice in relation to how you should complete your Gift Aid claims. For some charities that use software to generate the claims, this may mean updating the information in your database or asking your software supplier what steps they are taking to comply.

In short, HMRC do not want charities to continue quoting just a donor’s initials and surname. They want full names on claim forms as soon as possible. This is to enable them to better trace back to the donor’s tax records.

Whilst this is not a legal requirement as yet, it could very well become so in the coming years. HMRC wanted to change the law straight away but the sector, including Stewardship, successfully pushed back on this in view of the cost for some charities of necessary software changes.

The action points? For all new donors, make sure that you have their full names. For existing donors, where it is practical, update your records and claims to include the full detail.

#3: Remember that church finances and tax in particular is ‘a team sport’

It may be rare. But it is sad when someone within the church gets into the news for all of the wrong reasons. The reputational damage can be immense, impacting not just the individual church but those that may be innocently ‘associated’ with it.

Witness HMRC’s top 10 prosecutions of 2018. One was a church pastor who made £150,000 in fraudulent Gift Aid claims. Head of a relatively small church in Luton, he was the person who made the Gift Aid claims. But he acted alone and was the only authorised user of the church bank account. This enabled him to claim for individuals who didn’t actually give to the church and extra amounts to those that did. And he paid those extras to himself from the bank account that he effectively controlled. His ultimate reward? A four year jail sentence and a criminal record. Career over, probably.

The moral of the story? All things finance are a team sport – two sets of eyes should be on everything for counterchecking and authorising. Our Briefing Paper ‘Financial Controls in Charities’ provides some further details.

More like this:

Stewardship's Briefing Papers 

Watch: the slides and audio from the Stewardship treasurer dial-in on YouTube