Gift Aid pitfalls for charities and individuals

Tax changes could mean a liability for donors who are no longer taxpayers

The increases to the personal allowance in recent years and the changes to tax on savings and dividends have taken significant numbers of individuals out of income tax.

There is a risk that more people will now pay insufficient tax to cover their gift aid donations and will have a liability to make good any shortfall to HM Revenue and Customs (HMRC). Individuals who are paying a small amount of, or no, tax should consider carefully whether to sign declarations for any new donations and whether they should withdraw existing declarations for ongoing donations.   HMRC guidance for individuals is available.

Charities should check the wording of their declaration form

HMRC has updated the gift aid declaration guidance and templates to make the non-taxpayer’s potential liability much clearer. Charities should check whether the wording they are using complies with the latest HMRC guidance from April 2016 as the charity may be liable if they reclaim gift aid and do not hold a valid declaration.

If you would like any assistance with any of the above, please contact us.