Academy Trusts: Can academies claim gift aid?

Academies are able to claim Gift Aid on certain donations as long as they meet specified criteria. This could bring much needed additional funds to your academy trust. This article explores the requirements.

What is Gift Aid?

Gift Aid is a simple way to make your donations go further at no extra cost. It is a government scheme which enables charities to claim the tax back on donations from HMRC. You can claim an extra 25p for every £1 donated.

Only voluntary gifts or payments are eligible for Gift Aid. It is important trusts are clear on this definition. What is and isn’t eligible is detailed later in the article under the heading ‘Guidance for schools’.

You need to claim for a donation within 4 years of the end of the accounting period you received it in. If you claim under the small donations scheme you must claim within 2 years of the end of the tax year that the donations were collected in.

Registering with HMRC

Although academies are exempt charities they still have charitable status. The academy trust must be registered with HMRC as an exempt charity in order to claim Gift Aid.

Gift Aid declarations

To claim Gift Aid you need to get a Gift Aid declaration from the donor. It should state that the donor:

• has paid the same amount or more in Income Tax or Capital Gains Tax (CGT) in that tax year
• agrees to Gift Aid being claimed

The declaration must include a description of the gift and the:

• name of your academy trust
• donor’s full name
• donor’s home address (at least their house number or name and postcode)

HMRC provide an example template declaration form here.

You must keep a record of declarations for 6 years after the most recent donation you claimed Gift Aid on. Claims cannot be made without this evidence. Over the years, we have found that one of the biggest barriers to academy trusts making gift aid claims is the cost (time and money) outweighing the benefit. There are now many software solutions online that help reduce those costs and maintain the record of donor declarations.

You may still be able to claim on small donations of £30 or less if you do not have a declaration form, under the Gift Aid Small Donations Scheme (GASDS).

Gift Aid Small Donations Scheme (GASDS)

You may be able to claim 25% on:

• cash donations of £30 or less
• contactless card donations of £30 or less collected on or after 6 April 2019

This is called the Gift Aid Small Donations Scheme (GASDS). You do not need a Gift Aid declaration to claim. In order to claim under GASDS your academy trust must have claimed Gift Aid in the same tax year as you want to claim GASDS.

What is the GASDS limit?

You can claim up to £2,000 in tax relief in a tax year. This means the maximum amount of small donations that can be claimed under the scheme is £8,000. Additionally, your GASDS claim cannot be more than 10 times your Gift Aid claim. As already noted above your academy trust must have claimed Gift Aid in the same tax year as you want to claim GASDS. For example, if you receive £100 in normal Gift Aid donations in a tax year, then you can only claim on up to £1,000 of small donations under GASDS for that year.

You still need to keep accurate records and more information can be found here.

Guidance for schools

What is eligible?

Only voluntary gifts or payments are eligible for Gift Aid. Donations made to an appeal or for a specific charitable purpose of the trust, may be eligible for Gift Aid. Donations must not be linked to the provision of any benefit to a student related to a donor.

Donations given for the following will usually qualify for Gift Aid:

• non-uniform days
• sponsored events
• building appeals
• equipment appeals

What is not eligible?

If access to educational services or facilities provided by a school requires parents to make a payment, payments are not ‘voluntary’ and therefore they are not charitable donations.

If parents are asked to make ‘voluntary contribution’ payments to a school or school charity, which are linked to the provision of services or facilities to related pupils, they are not charitable donations.

Payments made for the following are not eligible for Gift Aid:

• tuition fees
• school holidays
• extra-curricular activities
• lessons
• educational trips (although there is an exception to this*)
• payments for raffles tickets
• tickets for a school production
• a ‘minimum donation’ where there is no choice about payment
• payments for goods and services

This is because these payments are not voluntary gifts, and a student receives a benefit paid for by a parent.

*In the rare case that payment made for the trip is considerably above the actual cost or requested voluntary amount subject to the ‘benefit rule’ then it may be possible. Guidance be found Guidance be found here.

You cannot claim Gift Aid on donations from limited companies.

Is Gift Aid worth it?

Yes. Gift Aid is an effective way of increasing your academy trust’s effort to raise additional funds. It all adds up. In a time of tight funding this could really benefit your trust.