Guidance

Annex ix: Gift Aid donor intermediaries

Updated 27 March 2024

1. Introduction

1.1. This guidance explains how the Gift Aid declaration ‘authorisation’ process works. HMRC has developed this new process with charities, intermediaries and their representatives. The process is covered by primary legislation (Income Tax Act 2007 s428) and in more detail in secondary legislation The Donations to Charity (Gift Aid Declarations) Regulations 2016 No. 1195.

1.2. The Gift Aid declaration authorisation process will make it easier for donors who give through digital channels, such as online platforms and SMS text messaging to Gift Aid their donations.

1.3. The authorisation process enables a donor intermediary to obtain authorisation from a donor to create Gift Aid declarations on the donor’s behalf for that donor’s gifts in the rest of the tax year.

2. What is a donor intermediary

2.1. A donor intermediary is someone who has been authorised by a donor to create and give Gift Aid declarations to a charity or Community Amateur Sports Club (CASC).

2.2. A donor intermediary can create and give Gift Aid declarations on behalf of a donor from the date authorisation was given until the end of the tax year. The created Gift Aid declaration must contain the same information given by the donor, which includes:

• state the donor’s name and home address
• name the charity
• the gift or gifts to which the declaration relates (for example, a particular donation or all donations)
• confirmation that the identified gift or gifts are to be treated as Gift Aid donations

2.3. If authorisation is given on or after 1 March then the donor intermediary can create and give Gift Aid declarations for the remaining part of that tax year and the following tax year if the:

• donor intermediary has been given the donor’s authorisation
• donor has not withdrawn their authorisation

3. The existing Gift Aid declaration process

3.1. Currently, under the existing process the donor must give a Gift Aid declaration for each new charity they give to. For example, if a donor made donations to 10 new charities the donor would also have to complete 10 separate Gift Aid declarations.

3.2. If a donor does not complete a Gift Aid declaration then the charity cannot claim Gift Aid and would lose out on an additional 25p for every £1 donated.

Example

3.3. Eva donates £10 to charity A, through an online giving website. When making the donation, Eva notices that she can use the same giving platform to donate to charity B and she can also donate to charities C and D whose aims she supports.

3.4. As Eva is giving to 4 different charities, currently she must give 4 separate Gift Aid declarations including her name, address and the name of each charity she has elected to give to. These Gift Aid declarations are given to the intermediary who then passes them, along with Eva’s gifts, to the charities.

4. The Gift Aid declaration ‘authorisation’ process

4.1. The new authorisation process will make it easier for donors to Gift Aid their donations to charities when donating through digital channels.

4.2. The donor intermediary will be able to request permission from the donor to create Gift Aid declaration on that donor’s behalf for the rest of the tax year. The declaration will last until the end of the tax year in which the authorisation was given, unless the permission was given on or after the 1 March, in which case the permission will continue until the end of the next tax year.

4.3. Once this permission has been given the intermediary can create Gift Aid declarations on the donor’s behalf for the rest of the tax year and Gift Aid will automatically be claimed on those donations.

4.4. The donor also has the option to cancel the permission at any point in the year for any reason. The donor has the opportunity in their cancellation notice to include a preferred date of terminating the authorisation with the intermediary. If the donor does not include a preferred termination date then the intermediary must cancel the authorisation from the date that the donor gives the cancellation notice.

Example

4.5. Eva donates £10 to charity A, through the donor intermediary’s website. When using the donor intermediary to make the donation she notices that she can use the same giving platform to donate to charity B and she can also donate to charities C and D whose aims she supports.

4.6. As Eva is using a donor intermediary she has the option to give them authorisation to create Gift Aid declarations on her behalf for the rest of the tax year.

4.7. Eva finds this is much easier than completing 4 separate Gift Aid declarations and all her donations are automatically Gift Aided.

5. Authorisation requirements

5.1. A donor intermediary must comply with a number of statutory requirements.

5.2. These requirements are:

• to keep a record of the donor’s authorisation
• to keep a record of the date on which the intermediary explained the consequences of making donations with Gift Aid to the donor - donor intermediaries need to explain that the donor could incur a tax charge if they make a donation under Gift Aid without having paid sufficient tax in the relevant tax year to cover their donation, further guidance on paying sufficient tax to cover Gift Aid is in chapter 3.5
• to keep a record of any cancellations of the donor’s authorisation, including the date the cancellation was received
• to issue a statement annually to donors summarising the Gift Aided donations made under the authorisation
• to keep a record of the annual statement (including date) sent to donors

Record of authorisation

5.3. When a donor completes their first Gift Aid declaration in a tax year through a donor intermediary, the donor intermediary may ask permission to create Gift Aid declarations on the donor’s behalf in respect of donations made in the rest of the tax year.

5.4. A donor intermediary can request authorisation at any time. For example, it could be done when the first donation is made in a tax year, or it could be included with the previous year’s annual statement. This is entirely up to the donor intermediary. However they must have this authorisation before they start creating Gift Aid declarations on the donor’s behalf.

5.5. The donor intermediary must keep a record of the permission and the date it was given. This record should be kept in a format which can be audited by HMRC, this may be on paper, spreadsheet or other digital format. The donor must keep this record for 6 years from the end of the tax year in which the authorisation is given and produce the information when requested by HMRC. If the authorisation was given after the 1 March then the donor intermediary is required to keep the authorisation for 6 years from the end of the subsequent tax year in which the authorisation was given.

5.6. Failure by a donor intermediary to keep a record of authorisation given by donors could result in the intermediary being charged a penalty. In addition, charities that have received Gift Aid payments in respect of donations made under such authorisations may have to repay that Gift Aid.

Record of the explanation of Gift Aid

5.7. Gift Aid is a tax relief and donors should not indicate that they want to Gift Aid donations unless they have paid or will have paid enough tax to ‘cover’ the Gift Aid. The donor intermediary must explain to the donor that if he or she has not paid an amount of Income Tax or Capital Gains Tax at least equal to the Gift Aid that will be paid to the charity they are liable to pay the difference and may be asked to pay this amount to HMRC.

5.8. The donor intermediary must explain this to the donor before or when they seek permission from the donor to create Gift Aid declaration on their behalf. They are required to keep a record of the date on which the explanation was given.

5.9. The donor intermediary must keep a record of that date for 6 years from the end of the tax year in which the explanation was given and must supply the information to HMRC when requested. The records can be kept in hard copy or electronically.

Record of any cancellations

5.10. A donor may cancel their authorisation with a donor intermediary for any reason and at any time.

5.11. The donor may cancel an authorisation over the phone, via email, text message or by letter through the post. The donor intermediary must cancel the authorisation with effect from the date of the email, telephone call, text message or on which the letter was received, unless the donor specifies that the cancellation should be effective from a later date. The donor intermediary must keep a record of the date on which the cancellation was received as well as the name of the donor. The record must be kept for 6 years from the end of the tax year in which the cancellation is received and must be provided to HMRC upon request.

Issuing an annual statement

5.12. The donor intermediary must issue a statement annually to each donor who has given authorisation for Gift Aid declarations to be created on their behalf.

5.13. Annual statements must be issued by the 31 May following the end of the tax year in which the Gift Aid declarations were created. For example, the annual statement for the tax year 2017 to 2018 should be issued before 31 May 2018.

5.14. Annual statements are optional if either:

• the total value of donations in that tax year is £20 or less
• only one Gift Aided donation is made in the tax year

5.15. The annual statement must contain:

• the total value of donations made by the donor which have been made under a Gift Aid declaration given by the donor intermediary during that tax year (the ‘Gift Aided donations’)
• the maximum amount of Gift Aid which charities may claim on those Gift Aided donations
• an explanation that the total donations shown on the statement does not include any given through other donor intermediaries on behalf of the donor, or given by the donor directly to a charity
• an explanation that if the donor paid less Income Tax and Capital Gains Tax in that tax year than the amount of Gift Aid claimed by charities on all the donor’s donations in that tax year, it is the donor’s responsibility to pay any difference

5.16. The donor intermediary must send the statement in writing to the donor, which includes email, or provide details of how to access the statement.

5.17. The donor intermediary must keep a record of the annual statement for 6 years from the end of the tax year to which the statement relates and must provide this to HMRC upon request.

6. Penalties

6.1. The donor intermediary may be liable for a penalty if they fail to comply with any of the requirements set out in paragraph 5.2.

6.2. The penalty is £50 for each failure. For example, if a donor intermediary fails to keep records of 2 authorisations and records of 2 cancellations then they may be charged a penalty of £200 (£50 for each of 4 failures to comply with a statutory requirement). However, the total penalties which an intermediary may be charged for such failures in any one tax year cannot exceed an upper limit of £3,000.

6.3. HMRC may review records for more than one tax year at a time. HMRC will provide the donor intermediary with a calculation showing where the failures occurred and how the penalty was calculated.

6.4. HMRC will write to the donor intermediary to request certain information from them so they can carry out their compliance check. This letter or email will contain the information HMRC wants to review, the date by which the information needs to be sent to HMRC and where the information should be sent.

6.5. If the donor intermediary fails to provide the information then they may be liable to a penalty of £300. If this failure continues after the date on which that penalty is imposed, the donor intermediary can be charged a daily penalty not exceeding £60 for each subsequent day.

Example

6.6. A donor intermediary fails to keep a record of 10 authorisations from donors in the 2017 to 2018 tax year and fails to keep a record of 5 authorisations from donors in the 2018 to 2019 tax year. Therefore the donor intermediary has failed on 15 occasions over a 2 year period and will be charged a penalty of £750 (15 × £50).

Annual limit on penalties

6.7. There is an overall annual penalty limit of £3,000 for each tax year. For example, a donor intermediary that fails to keep records of 60 annual statements issued will be charged a penalty of £3,000 (60 × £50). If that donor intermediary had also failed to keep records of 20 authorisations in that tax year the penalty would not be increased beyond £3,000 due to the overall annual limit.

Example

6.8. A donor intermediary fails to keep a record of 1,000 authorisations from donors in the 2017 to 2018 tax year, however complies with all requirements in the 2018 to 2019 tax year. Because all the failures occur in one tax year the intermediary will be charged the maximum penalty of £3,000.

Example

6.9. A donor intermediary fails to keep a record of 1,000 authorisations from donors in the 2017 to 2018 tax year and also fails to keep a record of 1,000 authorisations from donors in the 2018 to 2019 tax year. The donor intermediary is liable for a penalty of £6,000 which is worked out as £3,000 for the failures in 2017 to 2018 tax year and £3,000 for the failures in 2018 to 2019 tax year.

Penalty for failure to send information to HMRC

6.10. If the intermediary fails to send the requested information to HMRC by the date stated in the letter from HMRC then there is a penalty of £300 plus a £60 penalty for each subsequent day on which the failure continues.

6.11. However, it’s important to note that the £300 penalty for failure to provide HMRC with information and documents and any subsequent £60 daily penalty are not subject to an annual limit.

How to appeal to HMRC

6.12. If HMRC sends the donor intermediary a penalty letter by post, use the appeal form that comes with it or follow the instructions on the letter.