Gift Aid is a UK tax incentive available to all registered charities, social enterprises, and Community Amateur Sports Clubs, allowing them to reclaim additional money from HMRC from eligible donations. The Gift Aid scheme was originally introduced under the Finance Act 1990 on cash gifts of £600 or more but is now available for all charitable donations and retail purchases.
How Much Is Gift Aid Worth And How Does The Scheme Work?
Gift Aid is an important source of income for UK charities – according to the Charities Aid Foundation (CAF), charities will benefit from an estimated £1.2 billion worth of tax relief through the scheme in 2023, representing around 6% of the voluntary income received by the sector.
Since its introduction, money reclaimed through retail Gift Aid has been used to help millions of people in the UK and around the world, from providing critical food and shelter to supporting research into life-saving medical treatments. Gift Aid makes a real difference in people’s lives.
The way the scheme works is straightforward. UK charities can claim back the basic rate tax already paid on donations by the donor (because the money used for retail purchases has already been taxed) meaning that Third Sector organisations can claim 25p of tax for every £1 donated. The scheme also applies to purchases made through charity shops and online retail outlets. For a donation to be eligible, the donor must be a UK income tax or capital gains taxpayer, with the amount of tax paid equal to or more than the amount that your charity will be receiving through Gift Aid from the transaction.
How To Claim Gift Aid On Charity Shop Donations And Purchases
To claim Gift Aid from HMRC on a donation or charity shop purchase, charities need to fill out a Gift Aid declaration form (for each transaction) and submit it to HMRC. Traditionally, these claims are made using paper forms, but this can be a time-consuming and error-prone process, and more electronic and digital solutions are now becoming popular.
For instance, organisations can also make online claims through eligible software, or spreadsheet submissions with up to 1,000 donations per spreadsheet. Dedicated charity Gift Aid automation solutions, such as the EPOS and Gift Aid management systems we offer at Wil-U, will make it quicker and easier for both donors and charities to submit and claim Gift Aid tax relief.
Our cloud-based system makes donating much safer, with protected information and data replacing vulnerable paper-based receipts and signup forms – keeping sensitive information secure and in one place.
Donor information can also be safely and securely stored in the cloud in order to claim digital Gift Aid on online purchases. A Gift Aid processing system will link the donor to the sale, automatically calculate the Gift Aid claim amount, submit the claim to HMRC, and contact the donor automatically with an email receipt.
Digital Gift Aid Solutions From Will-U
Our Wil-U charity EPOS and Gift Aid management systems are designed to be easy to use, cost-effective, and straightforward. Our Android tablets don’t need engineers to install them in-store and have an intuitive platform that is simple to set up without any training required and works well on all broadband connections.
To find out more about our Gift Aid solutions and how you can maximise your income from this valuable tax relief, please click here to sign up for our digital Gift Aid demo or get in touch with us directly.
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