How to Claim Gift Aid for Your Church

What Gift Aid adds to your giving

When a UK taxpayer gives your church £10, HMRC will add £2.50 if you claim it. That’s the basic-rate tax they’ve already paid on the money, worked out at 25p for every £1 given.

The giver doesn’t pay anything extra. They must have paid enough Income Tax or Capital Gains Tax in the year to cover what all their charities claim. That’s their responsibility, not the church’s.

Before your first claim, get your HMRC reference

Your church needs to be recognised by HMRC as a charity for tax purposes. Once it is, you’ll have an HMRC charities reference, which is up to two letters followed by up to five numbers.

Claims are made by your Authorised Official through Charities Online, using a Government Gateway login. If someone else will make claims for you, they need to be set up as your agent or nominee with HMRC first.

Check every gift can be claimed

Gift Aid only applies to money given freely by an individual who has made a declaration covering that gift. You can’t claim on:

• gifts from companies, trusts or other organisations
• payments for something, such as hall hire, raffle tickets, event tickets or fees for weddings and funerals
• money someone collected from friends or colleagues and handed in as one gift
• gifts where the giver gets more back than HMRC allows

The benefit limit is 25% of the first £100 of a gift plus 5% of anything above that. Each giver can receive no more than £2,500 of benefits from your church in a tax year. If a benefit goes over, the whole gift can’t be claimed.

Small gifts can share one line

Gift Aid gifts of £20 or less from different people can be added together on one line of your claim. Each line can be up to £1,000 and needs a short description, such as “Envelope scheme April to June”.

Every one of those givers still needs a valid declaration. HMRC has written to charities about misusing these lines, so keep a record of which gifts make up each one.

Fill in HMRC’s schedule spreadsheet

HMRC publishes the schedule as an OpenDocument spreadsheet (.ods), in versions for Excel and LibreOffice. Each claim can have up to 1,000 lines. Larger claims need splitting, with each one sent before you start the next.

For each giver you enter their title (up to 4 letters), first name, last name, house name or number and postcode. Then add the date of their last gift and the total.

• Write dates as DD/MM/YY and amounts without a £ sign, with two decimal places.
• Put postcodes in capitals with a space, such as SG11 2AB.
• Don’t rename the tab or change the file type, and don’t paste into the sheet.

Pasting is the usual cause of HMRC’s “ASM” errors. Spaces before or after a name cause problems too. The top of the sheet also asks for the earliest gift date in the claim, and any tax you over-claimed before.

Send it through Charities Online

Sign in to Charities Online, start a claim and attach the spreadsheet. HMRC usually pays by bank transfer within about 4 to 5 weeks of an online claim.

There’s no set timetable for claiming. Many churches claim every quarter or once a year, finishing each claim before starting the next.

Watch the four-year deadline

If your church is a charitable trust, as many are, you must claim within 4 years of the end of the tax year the gift was received in, and tax years run from 6 April to 5 April.

A CIO or charitable company counts from the end of its accounting period instead. Gifts older than that can’t be claimed at all, so it pays to check what’s close to the line.

Keep your records for six years

HMRC can ask to see how each claimed gift links to a giver and their declaration. Keep the declarations, bank statements, envelope records and claim files for 6 years from the end of the period they relate to.

A declaration that’s still in use, such as one for a standing order, needs keeping for as long as it’s used. The 6 years then start from the last gift it covered.