Sporties Site: Skydive99.com

My Basket

close
 
Call Today: 01404 890222
info@skydiveukltd.com

 

GIFT AID EXPLAINED

Gift Aid can seem confusing sometimes but we hope the below information will answer any questions you may have about it. We have split this information into two sections - 1) At a glance information, 2) detailed information. If you still have any queries about Gift Aid, please seek further advice from your chosen charity or HMRC (see links at page end).

 

 
Gift Aid at a Glance
 
What is Gift Aid? - Tax reclaimed by the charity, from an individual's gift donation.
 
What is Sponsorship Payment for Adventure Fundraising Events? - When the activity is paid for using a portion of the sponsor money (usually after a minimum amount has been met). All participants must ensure their donors are made aware of this payment scheme when seeking sponsorship.
 
What is a Benefit? - When an individual is receiving something in return for taking part in a fundraising event. i.e. a skydive
 
What does 'Connected Persons' mean? - Someone who is connected to the individual taking part i.e family member. Gift Aid cannot be claimed on donations made by 'connected' people, or donation made by the individual themselves
 
Tax? - Gift Aid can only be claimed on a donation made by an individual who has paid tax that is over, or equal to the amount the charity will reclaim within that tax year.
 
How to make a Gift Aid declaration? - By giving the charity some simple information about you, i.e. your address / name etc.
 
Gift Aid in More Detail
 
Gift Aid The Gift Aid scheme is for gifts of money by individuals who pay UK tax. A gift of money can be the amount an individual has sponsored another individual to take part in an activity - such as skydiving. 
 
Sponsorship Payment (Adventure Fundraising Events) - This is when the charity has given permission for a portion of the sponsor money to go towards the cost of the activity. In most cases, charities will allow this to happen only if an individual reaches a minimum amount specified by them. Skydive UK Limited and our charity partners encourage our customers and supporters to be clear about how the skydive will be paid for. They must use official sponsor forms and declare this scheme if using an online sponsorship site (further details of how to declare this will be explained when setting up an online account). They should also explain the 'Connected Persons' rule - see below.
 
Benefit - Although taking part in a charity skydive can feel like a huge challenge, a skydive is actually classed as a 'benefit'. When an individual receives a 'benefit' by taking part in a sponsored charity challenge, certain Gift Aid rules apply, as explained below.
 
Connected Persons - *Anyone 'unconnected' to the individual, can sponsor them an amount of money which is then eligible for Gift Aid (*as long as they also fit the tax criteria below). If a 'connected' person sponsors an individual, their donations cannot be 'Gift Aided'. This is because they are deemed to be 'helping' the individual achieve their 'benefit', by sponsoring them. Gift Aid also can't be claimed on any donations made by the individual who is actually taking part in the challenge. People are classed as 'connected' if they are:

 (List taken from http://www.hmrc.gov.uk/charities/gift_aid/rules/adventure.htm)

 
Tax - Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities take the donation - which is money the individual has already paid tax on - and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on its 'gross' equivalent (the amount before basic rate tax was deducted). Basic rate tax is 20 per cent, so this means that if an individual gave £10 using Gift Aid, it would be worth £12.50 to the charity.
 

You don’t necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you’ve paid could include:

  • tax deducted at source from savings interest
  • tax on State Pension and/or other pensions
  • tax on investment or rental income (including tax credits on UK dividends)
  • Capital Gains Tax on gains
To work out if you’ve paid enough tax to cover your donations, divide the donation value by four. For example, if you give £100 in a particular tax year you will need to have paid £25 tax over that period. (£100/4 = £25). (Note that this calculation is based on the basic rate tax of 20 per cent)
 
Higher Rate of Tax - If you pay a higher rate of tax, please see further details found by following this link; http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm#4
 
How to make a Gift Aid declaration - In order to make a Gift Aid donation you’ll need to make a 'Gift Aid Declaration'. The charity will normally ask you to complete a simple form i.e. a sponsor form, asking for the below information.

A Gift Aid declaration must include:

  • Your full name
  • Your home address - including your postcode
  • The name of the charity
  • Details of your donation, and it should say that it's a Gift Aid donation (there's usually a 'tick' box)
Your details - Your details maybe stored by the charity and will be passed on to HMRC for the Gift Aid claim. They will not pass your information on to anyone else.
 
It doesn't cost you a penny extra - By ticking the Gift Aid box and supplying the appropriate information for a declaration, you are allowing the charity to reclaim the tax on your donation. You will not have to pay any extra or do anything else, unless your tax status changes or you want to withdraw the Gift Aid declaration. In these cases, you must contact the charity directly.
 
To ensure charities make as much of the money eligible, as possible, we have given two examples below;

Example 1) Ben raises £400 in sponsors from friends (no one who is connected to Ben sponsors him), he uses £50 of the sponsor money to pay the Skydive company for the booking fee. He also uses £200 of the money to pay the skydive company for the balance of the skydive. He then gives the remaining £150 to the charity = If the charity is 'responsible' for paying the skydive company (i.e. it is the charity that is invoiced by the skydive company) and Ben is *authorised by the charity to pay the deposit and balance directly to the skydive provider on behalf of the charity (using sponsor money), then all of the qualifying donations will qualify for Gift Aid. However, if the charity did not want to be invoiced under this agreement, only money over and above the £250 qualify. *Authorised means the individual will deal with all payments on behalf of the charity. They charity will not have to make any direct payments unless otherwise agreed in writing.

Example 2) Ben raises £400 in sponsors from friends (no one who is connected to Ben sponsors him), he uses £50 of the sponsor money to pay the charity for the registration fee. He also uses £200 of the money to pay the charity for the balance of the skydive. He also gives the remaining £150 to the charity. The charity pays for Ben's skydive using £250 from his sponsor money = As the charity receives all the qualifying donations. A charity can then apply its income (including Gift Aid), for charitable purposes. If it is able to apply its income to pay for the skydives for participants (i.e. the charity is able to do this under the terms of its constitution and in accordance with Charity Commission requirements) it will be charitable expenditure for tax purposes.

If neither of the above is done, the £250 used to pay for the skydive WILL NOT be eligible for a Gift Aid claim.

FOR MORE INFO http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm or http://www.institute-of-fundraising.org.uk/guidance/about-fundraising/tax-effective-giving/
 
Source - HM Revenue and Customs and The Institute of Fundraising. Updated - 2012

 

 

 

 

 

X