HMRC has recently published new model gift aid declarations for single and multiple donations. While there’s been some significant and welcome simplification of the forms, there’s also a new information requirement that’s less positive. Charities will need to update the declarations they use by 5 April 2016 to reflect the new requirement and ensure that declarations they receive continue to be valid.
New information requirement
As a whole the model statement has been rearranged to try to improve the gift aid messaging and reduce the amount of text donors will need to read. The central part of the new model declaration now looks like this:
I am a UK taxpayer and understand that if I pay less Income Tax and/or Capital Gains Tax in the current tax year than the amount of Gift Aid claimed on all my donations it is my responsibility to pay any difference.
The key substantial difference is the inclusion of a ‘tax to cover’ statement that confirms it is the donor’s responsibility to pay back any shortfall in their tax paid against the gift aid claimed. This new requirement is reflected in the updated list of information that a declaration must include (although the principle of ‘tax to cover’ has always been an element of the gift aid system).
What charities need to do
While the new model declarations and requirements are effective immediately, HMRC will continue to accept declarations using the old model until 5 April 2016, giving time for charities to update the declarations they use and run down any stocks of printed materials they may have. However, declarations made under the old model after this deadline will be considered invalid by HMRC, and gift aid claims rejected.
Charities should start planning now to update their online and printed statements, fundraising scripts and letters for oral declarations, and use up existing printed stock. Given the delays that can exist between sending out fundraising materials and receiving donations, charities should aim to have their materials updated well ahead of the deadline to ensure declarations they receive after it will be valid. Charities that use third parties to manage their web development will also need to plan in the time and resource for these changes to be made ahead of the April deadline.
Charities will not need to contact donors to update existing enduring declarations.
Measuring the effects
The overall simplification of the declaration may have benefits for donor uptake of gift aid, but conversely there are concerns that the introduction of the ‘tax to cover’ statement could reduce the number of eligible donors who choose to use the scheme. It’s not clear what the net effect of the changes will be, and this may well vary across different sub-sectors and forms of fundraising.
Ultimately, the model declarations are only examples. Provided a declaration contains all of the required information, charities are at liberty to design their own forms and wording if they feel it will produce greater gift aid uptake – although they should take care to ensure that any variations do in fact meet those requirements.
We would be very interested to hear from charities that plan to conduct any comparison of gift aid income under the old and new declarations, and whether any charities are planning to depart from the new model declaration – either write a comment below or drop me an email on michael.birtwistle@ncvo.org.uk.
Michael was our senior policy officer until January 2019, covering issues around charity tax and finance (including social investment) and the impact of the economy on the sector. 
