15 January 2018
Sectors:
Charity and Not for profit
Services:
Corporate Tax Planning,
Supporting our Voluntary, Community & Social Enterprise Sector
In last month’s Budget, the Treasury made a welcome announcement that it is simplifying the rules surrounding Gift Aid and donor benefit.
The new rules mean that charities will be able to provide donors with a higher level of benefit and still continue to claim Gift Aid on certain donations.
A charity can only claim Gift Aid on a donation if the donation is significantly higher than the value of benefit. Currently, there are three bands setting out the value of benefit a donor can receive from a charity with the donation remaining eligible for Gift Aid. However, under the new legislation, this will be reduced to two from 6 April 2019.
For donations up to £100, the 25% limit remains. For donations upwards of £100, a 5% limit applies to everything above £100 and the 25% applies to the first £100. The overall £2,500 maximum benefit remains.
Example: Joe Bloggs donates £1,000 to a charity. Currently, the maximum value of benefit he could receive would be £25. Under the new rules, the charity would be able to provide a benefit to Joe Smith up to the value of £70. (£25 plus 5% of the excess over £100).
These planned changes should make claiming Gift Aid on donor benefits much simpler for charities and should alleviate the problem of some charities not claiming at all due previous intricacies.
Voluntary sector organisations have been calling for these changes for some time now. Overall, there has been a very positive response with the Institute of Fundraising and the Charity Tax Group both welcoming the changes as a step in the right direction.
If you’re struggling to make sense of Gift Aid or any other technical aspects of your not-for-profit’s finances, contact our specialist charity accountants in Newcastle. We work with a diverse array of the not-for-profits in the North East region and we’re wholeheartedly committed to providing a cost-effective and practical service to your meet all your needs.
Get in touch with Gillian Hollier if you'd like to find out more information on our services to charities.
