Can spouses reallocate their giving for Gift Aid?

Background

As church and charity workers and leaders, we recognise that Gift Aid is a very valuable gift from the UK government making a significant difference to what we can achieve in ministry. It is one neither to be neglected nor misused. HMRC have written readable and comprehensive guidance on Gift Aid here: Gift Aid - GOV.UK.

One area that we get a lot of questions around, which can fall into this category of either ‘neglected’ or ‘misused’, is that of giving by spouses (or, more accurately, not only spouses but also partners and other joint account holders).

This can be ‘neglected’, as both givers and administrators can fail to think about whether giving from two partners – one of whom is a taxpayer and one who is not – could be legitimately rearranged so that the giving can recover more in Gift Aid. 

It can also be ‘misused’, as administrators look to claim more Gift Aid than they legitimately should on the grounds of “it all comes from the same income, doesn’t it?”

The general principle of Gift Aid is that where a UK taxpayer (someone who pays either Income Tax or Capital Gains Tax) completes a suitable Gift Aid declaration (see link above, chapter 3.6) then Gift Aid can be claimed on their donations (subject to certain conditions: see especially chapters 3.2, 3.3 and 3.18 to 3.26). This refers to the individual, not the family unit.

Secondly, (see 3.4.1 and 3.44.3) donors must donate their own money. Therefore, the individual must be giving their own funds and cannot Gift Aid money collected from family, friends or work colleagues, or money raised from fundraising activities or other funds given to them by others to give to the charity.

What do HMRC say in their guidance about married couples

There are two specific areas that are relevant to churches or Christian ministry charities where HMRC’s guidance refers to ‘joint’ arrangements:

• joint declarations (chapter 3.10)
• donations from joint bank accounts (chapter 3.32)

Chapter 3.10.2 Joint declarations

This is mostly around administration. My own comment is that it doesn’t really make much difference, but it is there and can be used. HMRC state:

“It’s possible for spouses, civil partners and other persons living together to make a ‘joint’ declaration on the same form (in effect, there are two Gift Aid declarations).

The ‘joint’ declaration must include the full name and address of each person. Both parties will need to make clear to the charity involved how much of any donation relates to each of them. They’ll also need this information for their own tax affairs.”

Chapter 3.32 Donations from joint bank accounts

HMRC says:

“If a charity receives a donation drawn on a joint bank account, and it’s not been given a Gift Aid declaration by both account holders, it’ll need to determine whether the donation is from the donor who has given a Gift Aid declaration. The charity may, however, assume that the donation is from the person who has made the Gift Aid declaration, even if it’s authorised by the other account holder, unless it holds evidence to suggest that the donation is from that other account holder.”

This guidance is certainly helpful. It brings clarity on how joint account giving can be treated when only one of the account holders is a taxpayer or where, for other personal reasons (such as one party potentially being a higher rate taxpayer) there is a preference on how the giving is allocated for Gift Aid.

Our advice to givers and Gift Aid administrators is to make sure that you are not missing a potential increase in ability to claim when one spouse has ‘tax cover’, and for whom Gift Aid can be safely claimed, and the other does not.

The guidance goes on in 3.32.3: “If there’s any doubt whether the donation is from the person who signs the cheque, or authorises the transaction, the charity should ask them to confirm whether the donation is from them.”

This is useful and you can simply follow what HMRC suggests here in situations where there is doubt.

For example, if cheques are signed by one partner (or if the payment method is on-line – and it is from an individual’s URL or has messages or sign-off from one partner) and so, on face value, is a gift from the person who is not the taxpayer, it is wise to obtain confirmation from the taxpayer themselves that the gift is from them and they authorised the other to pay it on their behalf.

What the guidance does not say

The guidance does not mean that husband and wife (or other partners or joint account holders) can be considered as ‘one giver’ and their giving simply allocated by the charity administrator to whoever has the ‘better tax position’.

The principles remain unaltered: the individual giver who made the gift must have paid enough tax (Income Tax or Capital Gains Tax) to cover all of their charitable giving and have fulfilled the other general conditions.          

For example, if there is giving from a sole account in the name of a spouse or partner who is not a taxpayer, the administrator cannot simply reallocate it to the taxpaying partner. The HMRC guidance does not extend to any situations other than joint accounts. So, in a situation like this example, the giving needs to be assumed to come from the account holder. 

Conclusion

Gift Aid is a very valuable asset for charitable Christian ministry. We want to use it wisely, with diligence and safely; with all of the required administrative support that the HMRC guidance sets out.

We also want to use it with right attitude and full accountability, so it can be seen that there is no misuse of this generous facility. Let us ‘pay to Caesar what is Caesar’s’ and claim from Caesar what has been generously given to us to legitimately claim.