Gift Aid Advice and Tax Updates

We often get questions from charities and community groups in West Wales looking for clarification on how Gift Aid works.

The tax people at HMRC have updated their guidance for charities and community amateur sports clubs (CASC) on claiming Gift Aid on donations.

The guidance has been amended to reflect updated guidance on the retail Gift Aid process operated by charity shops on donated goods.

Gift Aid can be claimed on donations of money made by an individual UK income taxpayer.

It’s an easy way to help your charity or community amateur sports club (CASC) maximise the value of donations.

To claim Gift Aid, you must be recognised by HM Revenue and Customs (HMRC) as a charity or CASC and you’ll need to ask donors to make a Gift Aid declaration.

In certain circumstances, some payments made to charities which are not strictly gifts, like membership subscription paid to a charity, may be treated as donations for Gift Aid purposes.

If any donor or person connected to the donor benefits significantly from their donation, it doesn’t qualify for Gift Aid.

To explain the ‘benefit rule’ – When someone makes a donation, you might want to give the donor something in return (an item or service) to say thank you. This is known as a ‘benefit’. Literature that tells donors what your charity does (eg a newsletter or a simple plaque to thank a donor) is not classed as a ‘benefit’.

The value of a benefit is always the value to the recipient, not the cost to your charity or CASC. For most benefits, the value is simply the retail value of the item or service.

If you can’t find out the retail value of an item or service, you must work out how much someone would be prepared to pay. You could, for example, look at the value of similar items or services. Where a benefit is attendance at an event that is not open to the public, the value of the benefit is the cost of the event divided by the number of guests.

You can claim Gift Aid on the donation if the value of the benefit doesn’t exceed certain limits. Check with the Gift Aid website (listed below) first.

You must keep a record of Gift Aid donations you receive and all benefits that were given to donors as a consequence of their donation.

You can find our more about how Gift Aid works on the Government website –

https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on

In other news, the following Tax Events are due on October 31:

Deadline for submission of 2015/16 self assessment returns if you require HMRC to compute your tax liability and/or if tax underpaid is to be collected by adjustment to your 2017/18 PAYE code –

This deadline is only relevant for those individuals who complete a ‘paper’ self assessment tax return and who are employees. Where you have an underpayment you may request that HMRC collect the tax outstanding by making an adjustment to your tax code for the year 2017/18.

Please note that where your return is submitted online then the filing deadline for ‘coding out’ is 30 December 2016.

If your accountant is already dealing with this matter on your behalf you need take no action.

Deadline for submitting ‘paper’ 2015/16 self assessment returns –

This deadline is relevant to individuals who need to complete a self assessment tax return for 2015/16 and wish to file the return in a ‘paper’ form. Self assessment returns submitted after this date must be submitted electronically.

Please note that this deadline is not relevant if we are going to submit an online return for you or you are going to deal with the completion of an online return yourself. The deadline for submission of online returns is 31 January 2017.

Finally, a ‘well done’ to our accountant Donna Jones, who raised a total of £812 by running the Cardiff Half Marathon. Donna’s initial target was £300 and the extra funds made the 13.1 miles most definitely worth it!

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) –

http://www.clayshawbutler.com/news/latest-news-for-business

We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.

We stay ahead of the game by putting great store by continual professional development for our staff.

With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.

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