From 6 April 2017, donors can give intermediaries the authority to create Gift Aid declarations on their donations for the rest of the tax year.

HMRC has published new guidance here. This process won’t affect any current or future enduring Gift Aid declarations. Alternatively, intermediaries can create Gift Aid declarations for each donation.

This follows a consultation process on these new rules for intermediaries – CTG’s response can be read here.  In it, CTG welcomed the Government’s commitment to simplifying the administration of Gift Aid claimed through intermediaries,  but noted that it was important that practical implications for charities should be proportionate, and the user journey be simple and not confusing for donors. For this reason, we argued that the Annual Statement should be made optional or apply only to donors making more frequent or larger donations, and that there should be a passive rather than positive confirmation process for charities confirming Gift Aid eligibility each year. We have also made it clear to HMRC that it would be very impractical for these requirements to be extended to offline donations.

Additionally while we are confident that the new rules will work well overall for online platforms, we believe that further targeted work is needed to improve the process for claiming Gift Aid on SMS-giving. We have also encouraged the Government to give serious consideration to broadening the applicability of the rules to allow a single Gift Aid declaration to be applicable to all intermediaries and consider the long-term viability of introducing changes that are consistent with the aspirations of having a Universal Gift Aid Declaration Database.

Feedback from charities

In practical terms there will be no immediate implications for charities unless they operate their own intermediary platform. However, we would welcome feedback from charities over the next year to the following questions:

• Which of the third-party intermediaries that you use have signed up to the new rules?
  • Have you noticed any additional costs passed on by third party intermediaries associated with the new rules?
  • Have you noticed in significant change in the number of Gift Aid claims made?
• Have the new rules made any material difference to Gift Aid claims on SMS giving?
• Have you received any feedback from donors on the new rules?
• Do you operate your own qualifying intermediary platform and, if so, will you be signing up to the new rules?
  • What are your experiences of the new rules and the associated record keeping/database management?

Charities should make sure that their third-party intermediaries are aware of the new rules (which they can decide whether to opt-in to) and also that they are compliant with HMRC’s guidance on Gift Aid and digital giving, which was updated in April 2016. Importantly the guidance reminds users that the general rule still applies: that donors must only claim Gift Aid when donating their own money when using social giving opportunities.

Advice for intermediaries (from HMRC)

Asking donors for authority to apply Gift Aid

Intermediaries can get authorisation to make Gift Aid declarations at any time during the tax year. They need to tell the donor that if they pay less Income Tax and Capital Gains Tax than the amount of Gift Aid on their donations in a year, they’ll have to pay the difference. Once they have got authorisation from the donor the intermediary can make Gift Aid declarations for the rest of the tax year or until they cancel it. If the intermediary gets authority on or after the 1 March, they can make Gift Aid declarations for the remaining tax year and all of the next tax year, which starts on 6 April.

Allowing donors to cancel

Donors must be able to remove their authorisation at any time by contacting the intermediary. They must be able to set a date to cancel their authorisation. If they do not specify a date, their authorisation should end immediately.

Sending an annual statement to donors

The intermediary will need to produce an annual statement for the donor between the 5 April and 31 May for the previous tax year. They must send the statement directly to the donor or tell them it has been produced and provide instructions on how to access it. Intermediaries will not need to send a statement to donors who:

• only make one Gift Aid donation in a tax year
• donated less than £20 in total in a tax year

Intermediaries must include in the annual statement:

• the total amount of the donations that were Gift Aided
• the maximum amount of Gift Aid that can be claimed on their Gift Aided donations
• an explanation that donations directly to charities or to other intermediaries are not included in the statement
• an explanation that if the donor pays less Income Tax and Capital Gains Tax than the amount of Gift Aid claimed in a year, they’ll have to pay the difference

Recording requirements

Intermediaries need to keep certain records about the donor’s authorisation including the:

• date authorisation was given and the donor’s name and address
• date of any cancellations and the donor’s name and address
• explanation that the donor must pay more tax than the Gift Aid on their donations and the date this was given
• annual statement or how the intermediary made the annual statement available to the donor

Intermediaries must keep records of these events for 6 tax years from the end of the year when they were given or sent. Intermediaries will need to provide these to HMRC on request. Intermediaries can receive a £300 fine plus an additional daily penalty if you fail to provide these records.

Penalties

Intermediaries may be charged for any failure to keep records or issue a statement. They can be fined £50 for each failure to keep a record or issue a statement. They can be fined up to a total of £3,000 in a tax year. This cap does not apply to the daily penalty for not providing records to HMRC.