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Tsunami: Gift Aid can be arranged after donation

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4th Jan 2005
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The Inland Revenue has pointed out that a Gift Aid tax declaration can be made after a gift has been made to a charity raising money for victims of the Indian Ocean tsunami disaster, but said it cannot apply the tax relief in cases where no declaration is made.

The Times reported today that charities are missing millions of pounds in tax relief on donations because many donors are omitting to tick the box for Gift Aid when they give to the various appeals.

The paper quoted the British Red Cross as saying that half of donors had not ticked the Gift Aid box on their donations. "We are missing out on much needed income," a spokesman said.

However, the Revenue has pointed out that Gift Aid can apply retrospectively. A spokesman has told TaxZone that this was something "easily arranged" between donor and charity.

The Revenue's guidance on gift aid declarations says: "Donors will be able to give the charity a declaration: in advance of their donation, at the time of their donation, or at any time after their donation (subject to the normal time limit within which tax can be reclaimed ' normally around six years)."

Asked whether the Revenue was prepared to allow tax relief under Gift Aid whether or not a donor has ticked the box indicating that he / she is a taxpayer and wants Gift Aid to apply, a spokesman told TaxZone: "People must indicate by declaration that they want Gift Aid to apply to their donation."

"It's possible that the donor hasn't paid income or capital gains tax, and it's a personal choice so the Revenue cannot make assumptions," he added.

Trap for non-taxpayers and others using Gift Aid
Robin Williamson, technical director at the Low Incomes Tax Reform Group, told TaxZone that donors are often unaware that under the Gift Aid scheme they must pay enough tax during the year to cover the tax on the gift.

Commenting on the TaxZone story Tsunami disaster: Gift Aid reminder, Williamson said non-taxpayers and those whose total tax bill is less than the tax on their gift should not use the scheme.

He added: "Legally, any non-taxpayer who mistakenly signs a gift aid declaration, or leaves one in force in a year when their income has dropped below taxable levels, is liable to repay to the Revenue the tax element of the gift reclaimed by the charity.

"Sometimes this liability is strictly enforced. However, the Low Incomes Tax Reform Group has secured an undertaking from the Treasury minister John Healey 'that, in many cases, the Inland Revenue will explain the situation first to the charity, which will then decide voluntarily to repay the amount of the tax reclaimed'
[Hansard 6 July 2004, col 728].

Williamson continued: "This ministerial assurance is not widely known in local tax offices, so practitioners advising non-taxpayers who mistakenly sign, or forget to revoke, gift aid declarations may have to remind inspectors of this aspect of Government policy."

Healey, Economic Secretary to the Treasury, told the Commons that he had given a similar undertaking during the proceedings on the 2002 Finance Bill.

Andrew Goodall
[email protected]

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By AnonymousUser
06th Jan 2005 12:35

Gift Aid for Limited Companies
The notes on Gift Aid for individuals are very useful, but I'd like to make a donation from my (limited) company. Is Gift Aid the most tax efficient (for the company and the charity) way, and if so are there any things I should be aware of in making and recording the donation? And if not, what would be a better way to donate?

Many thanks
Donald

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Andrew Goodall
By Andrew Goodall
05th Jan 2005 15:44

'Maximise the millions'
The Charity Commission has published new guidelines today, 5 January, aimed primarily at people collecting to help disaster victims. They include the following advice on Gift Aid.

"Remember - GiftAid can save lives! For every £1 given by a UK taxpayer, the charity can claim an extra 28p in GiftAid, at no extra cost to the donor. When you consider how many millions have been given, that's a substantial extra amount towards the aid effort. Encourage people to GiftAid their donations by filling in the simple form here.

"This asks you to confirm you are a UK taxpayer and contains very simple questions about your name, address and amount of donation, and asks you to declare that you want it treated as GiftAid.

"If you are arranging a local collection, please think about printing off some of these forms and asking donors to fill them in. When you have banked the donations from a local collection, send off all the GiftAid forms to the charity, who will be able to reclaim the tax on them. It may be helpful to include the bank/building society receipt to prove that those amounts have been given.

"If you are donating over the counter to a charity such as the Disasters Emergency Committee, most banks have in place a system which will enable you to take advantage of Gift Aid when making a donation. Building Societies should also be aware of the scheme. Please ask if in doubt."

Andrew Goodall: [email protected]

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