Part A: Claims
Chapter 6.1: What charities can claim
6.1.1 A charity or Community Amateur Sports Club (CASC) can claim repayment of UK basic rate tax that is treated as deducted from donations made to it by individuals under Gift Aid. There’s no limit on the amount of a Gift Aid donation.
6.1.2 A charity cannot claim repayment of basic rate tax on donations made by companies, unincorporated businesses, trusts or other charities.
Donations from companies must not be included in any repayment claim. This is because donations from companies are paid gross out of a company’s pre-tax profits, so there’s no tax to reclaim.
6.1.3 The basic rate tax which can be claimed on Gift Aid donations made by individuals for part or all of a tax year can be calculated by using the following calculation.
The basic rate of tax for the year multiplied by the amount of the Gift Aid donations received (for example, 100) minus the basic rate of tax for the year.
For example, where the basic rate in force for a tax year is 20%, the fraction will be 20 / 80 (20 / (100 - 20)). On a Gift Aid donation of £10, the tax reclaimable would be £2.50 (£10 x 20 / 80).
6.1.4 Charities can also claim back any Income Tax deducted from certain other types of income they receive, for example:
- bank and building society interest
- interest from government stocks
- income from wayleaves, for example, sums paid by a utility company for the right to put cables across a piece of land
- other types of annual payment
- estate income
- discretionary trust income
6.1.5 HMRC Charities can only repay UK tax. For repayment of foreign tax you should apply to the tax authority of the country concerned.
Chapter 6.2: Gift Aid Transitional Relief
6.2.1 Additional transitional relief was available on donations made between 6 April 2008 and 5 April 2011. To qualify for payment of Gift Aid transitional relief on donations made between 6 April 2008 and 5 April 2011, claims must be made within 2 years of the end of the charity’s accounting period or the tax year. You do not need to make a special claim for transitional relief. If it’s due, HMRC will pay it automatically along with your Gift Aid tax repayment.
6.2.2 Time limits apply to the payment of the transitional relief for:
- charitable trusts, Gift Aid transitional relief is paid on claims made within 2 years of the end of the tax year in which the donation was received — consequently charitable trusts no longer qualify for transitional relief (latest date for qualifying claims was 5 April 2013)
- charitable companies and CASCs, Gift Aid transitional relief is paid on claims made within 2 years of the end of the accounting period in which the donation was received — charitable companies can receive transitional relief on qualifying donations until 5 April 2014 at the latest
Chapter 6.3: Authorised official
6.3.1 HMRC Charities will repay claims only if they’re signed by an authorised official, nominee or collection agency who has been notified to HMRC by the charity on form ChA1, ChV1 or CASC(A1). Dealing only with people that the charity has told HMRC are authorised to act on its behalf helps HMRC to cut fraud against the Gift Aid system.
6.3.2 When a charity or CASC signs up for Gift Aid on form ChA1 or CASC(A1), they must give details of at least 2 other officials within the charity or CASC and appoint at least 1 authorised official to deal with HMRC.
6.3.3 An other official is someone with legal responsibility for running the organisation and includes:
- directors (where the organisation is a company)
- other persons in controlling positions in the organisation such as the Treasurer, Company Secretary and Financial Controller
6.3.4 An authorised official must be a trustee, official, employee or other manager of the charity.
6.3.5 Any change to the authorised official must be made on ChV1 HMRC Charities change of details form. The form must be signed by 2 people with the role of authorised official or other official who were in post before the changes notified on the form took place. If a person is no longer an authorised official, this must also be notified on form ChV1. Use the ChV1 HMRC Charities change of details form guidance to help you complete the form.
6.3.6 To avoid delay in processing repayments, any change to the authorised official, should be notified to HMRC at least 1 month before submitting a repayment claim.
6.3.7 The declaration for an online claim must be completed by an authorised official of the charity (unless the charity has appointed a nominee or collection agency to do this) who’s already been notified on form ChA1, ChV1 or form CASC(A1) Community Amateur Sports Club (CASC) registration form. The person submitting that claim confirms that the claim is complete and correct and that the charity or CASC can claim exemption from tax for the period covered by this claim.
6.3.8 The ultimate responsibility for the accuracy and validity of any claim made in their name will remain with the charity concerned. Charity officials must therefore give careful consideration as to the suitability of any person or body they authorise to act on their behalf.
Chapter 6.4: How to make a repayment claim
6.4.1 Before making a first repayment claim, a charity or CASC must have applied to be recognised as a charity for tax purposes and have received a unique charity reference number from HMRC. You can find details of how to do this in Chapter 2.
6.4.2 Charities and CASCs must make repayment claims using the Charities Online Service, or alternatively a ChR1 paper form. Claims made by any other method will be rejected. All the claim methods include schedules where details of Gift Aid donors and their donations and other income must be entered. The ChR1 paper form must be signed by an authorised official of the charity or a nominee or collection agency appointed by the charity.
6.4.3 You will find help and guidance on making a claim using Charities online.
Chapter 6.5: Time limit for making claims
6.5.1 Claims must be made within 4 years of the end of the tax year (for charitable trusts) or the accounting period (for other charities and CASCs) to which they relate. Claims made late will not be paid.
6.5.2 For example, for a charity that is a trust a donation on 1 December 2010 falls in the tax year 6 April 2010 to 5 April 2011. A Gift Aid claim would have to be made in respect of that donation by 5 April 2015.
6.5.3 If the charity or CASC is a company with an accounting period ending on 31 December, a donation on 1 December 2012 would fall in the accounting period ended 31 December 2012 and the Gift Aid claim would have be made by 31 December 2016.
Chapter 6.6: Claims, other points to note
6.6.1 Claims can be made in respect of donations received in any period in any tax year, subject to the time limits set out above at paragraph 6.5, or for the whole of one or more accounting years. The Charities online system only allows you to make a claim for years that are in date.
6.6.2 Where a charity has not kept an auditable recording of a telephone Gift Aid declaration and issues written confirmation statements to donors to validate their Gift Aid declaration (read paragraphs 3.12.2 and 3.13.1), a claim can only be made after the written confirmation has been sent to the donor.
6.6.3 Claims can be submitted as frequently as a charity wants. Claims may not be paid, however, where the amounts being reclaimed are small (under £100) and the charity makes more than one claim in each tax year.
6.6.4 Repayment interest may be due and payable on a Gift Aid claim. Interest is calculated as follows:
- for a Charitable Trust — from 1 February next following the year of assessment to which the income relates
- for a Charitable Company or CASC — from the day after the end of the accounting period to which the income relates
If repayment interest is due, HMRC Charities will calculate the amount due and will pay the total tax claimed plus interest due together as a single payment to the charity or CASC.
6.6.5 Please tell HMRC Charities on form ChV1 as soon as possible if the name of the charity changes or if there’s a new authorised official. Do not wait until the next claim as this may cause delay in the processing of the claim.
6.6.6 Charities that organise sponsored events are able to claim Gift Aid on the pledged donations if the donors (that is, the sponsors, not the participators) complete Gift Aid declarations. These declarations can be incorporated into the sponsor forms — read the model Gift Aid Sponsor form.
6.6.7 For claims made using Charities online or the paper form ChR1, all the donations for someone taking part in a sponsored event can be put as one entry under the name of that participant.
This means you do not need to list every individual donor who sponsored the person. Only individual donations from a donor of £500 or more shown on individual sponsor sheets need to be separated out and listed individually on the claim form.
6.6.8 The procedure for sponsored events applies as follows:
Individual donor details do not need to be included on the Gift Aid Schedule.
Instead, the schedule should list the total amounts on each individual participator’s sponsor form for which Gift Aid declarations have been made.
Donations for which Gift Aid has not been claimed must not be entered on the schedule.
Each entry on the Gift Aid Schedule under the heading ‘Name of Donor’ should include the name of the event including the word ‘sponsored.’
For example, ‘Sponsored Walk 14 August’ and identify the sponsor sheet in question, either by use of the participator’s name or by use of an individual reference. The charity should enter further details in the additional information box at the end of the form.
You do not have to include sponsored events in this way, if the way you keep your records makes it easier to list each individual donation separately, then that’s fine.
6.6.9 Charities must retain the original sponsor sheets and be able to produce them in support of their claim in the event that HMRC audits the Gift Aid claim. This is because the sponsor forms contain the donors’ declarations of tax paid by the donors and form part of the audit trail connecting the payments and declarations to the charities’ claims to repayment of the tax.
In the past HMRC has agreed with some charities that certain other claims could be included under this modified claims basis, (also known as ‘special modified claims’) as a way of making claims easier for charities. These agreements no longer apply, but the arrangements for reporting sponsored events, and aggregated claims cover most of these other arrangements.
6.6.10 Charities and CASCs can add together small donations that they receive from multiple donors within certain limits.
The limits are that each individual donation within the aggregated amount must not be more than £20 for online claims or claims on paper form ChR1.
6.6.11 The entries on the schedule must be sensible descriptive labels that will enable the charity or CASC to find the relevant Gift Aid declarations to provide an audit trail to the information that supports the amounts listed on the schedule.
6.6.12 The adding together of small donations on the Gift Aid schedules cannot be applied to:
- donations larger than £20 for online claims or claims on paper form ChR1
- collections where there are no Gift Aid declarations
- donations associated with admissions to charity visitor attractions
- the arrangements for sponsored events
Part B: Returns
Chapter 6.7: Self assessment
6.7.1 All charities are subject to the self assessment legislation and must submit a tax return if either they:
- are asked to do so
- believe that they may have tax to pay
6.7.2 Charities set up as trusts are within the self assessment regime. Their tax affairs are dealt with on a tax year basis.
6.7.3 All other types of charities (for example companies limited by guarantee, bodies created by Royal Charter or Act of Parliament, Industrial and Provident societies or unincorporated associations) are within the Corporation Tax Self Assessment (CTSA) regime. Their tax affairs are dealt with on an accounting period basis.
Chapter 6.8: Accounts and returns
6.8.1 Charities should not send a copy of their annual accounts to HMRC Charities unless requested to do so following the issue of a tax return or a formal notice to file CT603 a tax return CTSA.
6.8.2 If a charity believes that it may have to pay tax (because some or all of its income and gains are not exempt from tax), it should submit an online tax return along with the appropriate Charity Supplementary pages CT600E. When submitting a return online, charities are required to enter the unique charity repayment reference number issued by HMRC. Any charity that’s not been issued with a charity reference number will be unable to file a return using the HMRC free filing service.
6.8.3 From 1 April 2011 onwards, all companies and organisations that are not trusts must submit their Company Tax Return online for any accounting period ending after 31 March 2010.
Trust and estate returns may be completed online or on paper. Paper returns must be filed by 31 October, online returns must be submitted by 31 January. Self assessment forms can be downloaded from GOV.UK or ordered by contacting the Self Assessment orderline on Telephone: 0300 200 3610.
6.8.4 The Self Assessment legislation requires a charity to complete and submit a tax return if either it’s asked to do so or it believes that it may have a liability to tax. Some charities will be asked to submit a tax return annually but most will only be asked to submit a return from time to time. HMRC Charities will select which charities it requires a tax return from and will issue formal notices to those charities. HMRC issues a notice to submit a tax return to all charities over a number of years as part of its programme to check compliance.
6.8.5 A charity that is a trust will need to complete a Trust and Estate Tax Return’ (form SA900). All other charities will receive a notice to file a Company Tax Return.
6.8.6 If a charity receives either a tax return or a Notice to file it must complete and submit a tax return. A charity that completes a Company Tax Return must send a copy of its annual accounts with the return online.
6.8.7 Both types of tax return have special charity supplementary pages which must always be completed in addition to the main tax return. If you’ve completed a Company Tax Return online you should also complete the supplementary pages online (for example, CT600E). If you’ve completed a Trust and Estate Return SA900 you should complete the supplementary pages on form SA907. The charity paper supplementary pages can be downloaded from GOV.UK. Paper Self Assessment Tax Returns can also be requested from the Self Assessment orderline by calling 0300 200 3610.
6.8.8 The charity supplementary pages include the claim to tax exemption and you should show the income and/or gains for which the charity is claiming exemption. Paper supplementary pages must be signed and dated. The electronic ‘signature’ process must be followed for online returns.
6.8.9 The charity supplementary pages also require confirmation that the expenditure of the charity has been for charitable purposes only (read Annex II) and that any investments or loans made are qualifying (or ‘approved charitable’) investments or loans under the Taxes Acts (read Annex III for details).
6.8.10 Where a charity claims exemption from tax on all its income and gains covered by the period in the return, it need only record ‘nil’ in the relevant boxes on the main Trust or Company return, and sign (electronically for online returns) and date the form. Where a charity has incurred a tax liability on all or part of its income and gains, it will be necessary to show the taxable amounts in the relevant boxes on the main return as well as signing (electronically for online returns) and dating the form.
Chapter 6.9: Company Tax Returns for smaller charities, filing online — format for accounts
6.9.1 All charities must complete a Company Tax Return if HMRC issues them with a ‘Notice to Deliver a Company Tax Return’ or they have income or gains which are not covered by a relief or exemption (in which case they should tell HMRC).
6.9.2 From 1 April 2011, new rules require all companies and organisations liable to Corporation Tax to file their Company Tax Return and accounts and computations online for any accounting period ending after 31 March 2010. This includes any charities required to file a Company Tax Return. Charities liable to Corporation Tax must file their accounts and computations in certain specified formats, depending on the nature of the charity.
6.9.3 Most company accounts and all computations must be filed in a set format: Inline eXtensible Business Reporting Language (iXBRL). iXBRL is an IT standard designed specifically for business financial reporting. HMRC provides a free filing service to submit Company Tax Returns online, which is suitable for most small unrepresented companies with less complex affairs. This service will provide a facility for Charities to upload PDF accounts (file size 5mb maximum) and includes a template to ensure which ensure the computations are submitted in iXBRL format.
6.9.4 If your charity has to prepare accounts under the Companies Act 2006 or Friendly and Industrial and Provident Societies Act 1968, the new rules require you to file your accounts and computations in iXBRL format.
6.9.5 For the moment HMRC will continue to accept accounts from smaller charities in PDF format. Computations, if required must be filed in iXBRL format but the free HMRC online service should be suitable for these. A ‘smaller charity’ for the purposes of this arrangement is one where, together with any wholly owned subsidiaries (companies owned by the charity), the combined income does not exceed £6.5 million for the accounting period.
6.9.6 Charities with a combined income above £6.5 million or for whom the HMRC free filing service is unsuitable will need to use commercially available software to file their Company Tax Return, their accounts and any computations in iXBRL format.
6.9.7 Unincorporated associations and incorporated charities not required to prepare accounts under the Companies Act or Friendly and Industrial and Provident Societies Act 1968 (for example charities incorporated under the Charities Act and charities established under Royal Charter or by Act of Parliament) must submit computations in iXBRL format, but can continue to submit accounts as a PDF or iXBRL file.
6.9.8 Subsidiary companies of charities are required to submit returns online with accounts and computations in iXBRL format.
6.9.9 All computations forming part of a Company Tax Return must be in iXBRL. However no computation is required where the Company Tax Return supplementary page CT600E is completed and confirms that all income and gains of the charity are exempt from tax and have been or will be applied for charitable purposes. These charities should attach a letter (as a PDF file) to their online return stating that no computation is required.
6.9.10 Charitable trusts are liable to Income Tax and make tax returns under self assessment, if required (read paragraph 6.8.3).
6.9.11 You can find more useful information in the guide Accounts and tax returns for private limited companies and charities and tax.
Chapter 6.10: Payment and filing dates
6.10.1 If a charitable trust has a tax liability for a year of assessment it must make 2 payments on account:
- the first on 31 January in the tax year in question
- the second on 31 July following the end of the tax year in question
Any balance still due must be paid by 31 January in the tax year following the year in question.
If a charitable company or other organisation within the CTSA regime has a tax liability for an accounting period it must pay any tax due within 9 months of the end of the relevant accounting period. Failure to pay any tax due by the payment date will result in an interest charge.
6.10.2 A Trust Self Assessment Return SA 900 and accompanying charity supplementary pages must be filed with HMRC Charities by:
- 31 October after the end of the tax year if a paper copy is completed
- 31 January after the end of the year of assessment if the return is filed online
A Company Self Assessment Return CT 600, charity supplementary pages CT600E and annual accounts must be filed with HMRC Charities within 12 months of the end of the accounting period to which the return relates.
6.10.3 Failure for either a company or a trust to file the required return (including the charity supplementary pages) and if required, the accounts, by the filing date will result in a penalty charge. Extension to the filing date cannot be granted but the penalty can be appealed if there is a reasonable excuse.
The filing date may be extended where the notice to make a return is issued late.
Chapter 6.11: Getting further help
6.11.1 There are notes to help with completion of the returns and the charity supplementary pages in Tax returns for charities and Community Amateur Sports Clubs and Trust and Estate Charities notes on the SA907 form page.
6.11.2 A charity receiving a notice to make a return should consider contacting its professional advisers for help in completing the return, particularly if figures need to be extracted from the accounts or there’s likely to be a liability to tax.
6.11.3 If a charity has any questions completing the charity supplementary pages, it can contact HMRC for help.