Gift Aid record-keeping

Key documentation requirements

When an eligible donation is made, a Gift Aid declaration from the donor is required before a charity can claim Gift Aid. This declaration is a statement that the donor is a UK taxpayer, has paid sufficient Income or Capital Gains Tax in the relevant tax year, and would like the charity to reclaim tax on their donation. Declarations can be made in writing, orally or online. Without a valid declaration, the donation is not eligible for Gift Aid.

A declaration can refer to any current and future donations, as well as any donations made within the last four years.

Donors can cancel their declaration at any given time. Once cancelled, any future donations will not be eligible for Gift Aid unless a new declaration is made. It is important for the charity to keep a record of the cancellation of a declaration, including the date of the donor’s notification. Where a donor has made an oral declaration and been sent a written statement by the charity, and cancels the declaration within 30 days, the cancellation will be as if the declaration had never been made.

HMRC guidance includes a template for Gift Aid declarations, which details all the information that must be included. There are declaration templates for one-off donations, multiple donations and sponsored events.

Each declaration must include the following information:

• the name of the charity or CASC
• the donor’s full name
• the donor’s home address
• whether the declaration covers past, present or future donations or just a single donation
• a statement that the donor wants Gift Aid to apply
• an explanation that the donor needs to pay the same amount or more of the Income Tax and/or Capital Gains Tax as all charities and CASCs will claim on the donor’s gifts in a tax year, and that the donor is responsible for any difference.

For verbal declarations, the same information as stated above must be collected. A written confirmation of the verbal declaration must be sent to the donor, and it must state that they have 30 days from the date of the written confirmation to cancel their declaration.

All Gift Aid declarations, whether written or verbal, must be retained.

For donations claimed under the Gift Aid Small Donations Scheme (GASDS), declarations are not required. However, records must still be kept, including the total donations made, the date of the collection and the date that it was paid into a bank account. For contactless payments, card machine receipts must also be kept.

Claims for Gift Aid must be made within four years of the end of the accounting period (or tax year in the case of charitable trusts) in which the donation is received, and GASDS must be made within two years of the end of the tax year in which the donation is received.

Retention periods and legal obligations

Gift Aid declarations are valid indefinitely unless cancelled by the donor or if the donor is no longer a UK taxpayer.

Records must be kept for six years from the end of the accounting period in which they relate to for all CASCs and for most charities. For charitable trusts, records must be kept for six years after the end of the tax year in which they relate, or 12 months after the charity makes a Gift Aid repayment claim for that tax year.

For regular or recurring donations, the declaration must be kept permanently. If the donor stops donating, the record must be kept for the required time limit, detailed from the date of the last donation. Where a declaration covers multiple donations, records must be kept from the date that the last donation was received.

Records can be kept physically or digitally; there is no requirement to keep both. If records are stored electronically, the original paper copies can be destroyed. For verbal declarations, the written confirmation or an audio recording of the donor’s declaration can be retained as a form of record-keeping.

A clear audit trail must be maintained for the required record-keeping period, linking each donation to its corresponding declaration. For GASDS, records of donations should also be kept for six years.

Best practices for efficient record keeping

To ensure that records are being kept efficiently, charities should:

• Conduct regular reviews of Gift Aid declarations.
  This includes reviewing declaration validity, donation records, and the accuracy of Gift Aid claims. This will allow the charity to identify and correct any discrepancies before HMRC carries out an audit.
• Provide regular staff training.
  Inform staff of Gift Aid rules, data protection and general record-keeping procedures. This ensures that the relevant staff understand the importance of record-keeping, compliance with HMRC requirements and will result in more accurate claims.
• Accounting software can also be implemented to aid with accurate record-keeping. 
  This can be used to store declarations electronically and track donations.
• Stay up to date.
  Processes should regularly be reviewed and adjusted to reflect any changes in legislation or HMRC guidance.

How can we help?

Record-keeping for Gift Aid is extremely important to ensure complete compliance with HMRC's regulations. Crowe’s Corporate Tax team can help you with advising on tax rules and eligibility for Gift Aid, supporting financial reporting and advising you on the best processes and procedures moving forward.