What is Gift Aid?
Gift Aid is a form of tax relief available to charities, allowing them to claim an extra 25p for every £1 donation received.
This means if you are a UK taxpayer who likes to give to good causes, you can supercharge your donations without spending a penny more!
Gift Aid revenue accounts for approximately £1.3bn a year, allowing many worthy causes to achieve wonderful things at no further cost to the donors that support them.
Well, there is no doubt that since it started in 1990, Gift Aid has achieved a phenomenal amount. However, there are some challenges, which if resolved, would increase the money raised even more.
It is estimated that charities miss out on a staggering £560m a year in Gift Aid due to several factors.
A recent report from the NCVO’s charity tax commission explored the reasons why Gift Aid only delivers a fraction of its potential, and these were found to include:
Technological discrepancies between modern methods of charitable giving (including SMS, Payroll Giving and social media) and the way Gift Aid is calculated. Gift Aid hasn’t kept up with technology, and this is a significant cause of loss.
Unwieldy Gift Aid declaration forms discourage smaller donations and are not clear or user-friendly. This leads to another problem; that of Gift Aid incorrectly being claimed by ineligible donors.
Current Gift Aid requirements also place a weighty administrative burden on charities, primarily affecting smaller charities.
This puts the Government in the awkward position of needing to maximise the amount of Gift Aid revenue available for its intended purpose; while battling the problems caused by errantly claimed Gift Aid.
How do we solve this?
In addition to exploring these difficulties, the Charities Tax Commission report also looks at potential solutions, like a Universal Gift Aid Declaration Database (UGADD). Such a database could simplify the Gift Aid process; however, we at Swiftaid believe the potential of this solution could do (and is doing) so much more.
In automating the Gift Aid process, charities of all sizes will benefit financially, and donors will be saved from time-consuming paperwork. Even HMRC will benefit, as this process will reduce the incidence of Gift Aid being claimed in error — along with all the associated problems that causes.
Swiftaid to the rescue!
The Swiftaid solution creates an annual universal Gift Aid declaration, which is linked to payment data and submits claims directly to HMRC on behalf of participating charities.
Automation of Gift Aid also keeps charities outside of GDPR by anonymising the records, and vastly reduces the record-keeping required by HMRC.
The Swiftaid solution also helps in the following ways:
All types of donation will be covered, including text, direct debit and social giving.
Future donations are automatically processed, further boosting the revenue available to charities.
Donors can sign up to Swiftaid in a matter of minutes, removing the need to fill in lengthy Gift Aid declaration forms.
Charities can sign up to Swiftaid with a simple, three-step process.
End-of-year reporting for charities is automatically included.
Of vital importance, the Swiftaid solution is fully compliant with HMRC Gift Aid rules, GDPR, is regulated by the FCA and is entirely secure through 256-bit TLS encryption and Open Banking protocols.
Swiftaid’s handy reporting functions also make it easier for higher-rate taxpayers to claim tax relief on the charitable donations they have made through Gift Aid. These donors no longer need to maintain manual records of their donations but can simply include a copy of this report with their tax return.
An ideal solution
The entire purpose of Swiftaid is to solve the problems associated with Gift Aid and to enable charities of all sizes to claim their full Gift Aid entitlement, without the administrative burden.
Donors using the Swiftaid system to enhance their charitable giving can rest assured their donations are secure and anonymous, and the maximum amount goes to their chosen causes.
Greater scrutiny of Gift Aid as a process, as well as a recognition that more needs to be done to ensure charitable giving ends up where it should can only be a good thing. We at Swiftaid know the technology to end the great Gift Aid deficit already exists, and we look forward to finding out what charities can do with an additional £560m a year.