Creating Gift Aid Declarations as an Intermediary

Introduction

If you operate as an intermediary organisation that collects donations for charities, you can create Gift Aid declarations on behalf of donors, allowing charities to claim an extra 25p for every £1 donated. Since 6 April 2017, donors can give you authority to make these declarations for them, though this comes with specific record-keeping and reporting obligations you must follow.

What intermediary Gift Aid authority means

As an intermediary collecting donations, you can ask donors to authorise you to create Gift Aid declarations on their behalf. This authority covers all donations they make through you for the rest of the tax year.

This process is separate from any existing Gift Aid declarations your donors may have set up directly with charities. Those enduring declarations remain unaffected.

You can also choose to create individual Gift Aid declarations for each donation instead of using the authority process.

Getting authority from donors

You can request authorisation from donors at any point during the tax year.

Before a donor gives you authority, you must explain that if they pay less Income Tax and Capital Gains Tax in a year than the total Gift Aid claimed on their donations, they will need to pay the difference to HMRC.

Once you receive authorisation, you can make Gift Aid declarations for that donor for the remainder of the current tax year, or until they cancel the authority.

There's a special rule for authorisations obtained late in the tax year: if you get authority on or after 1 March, you can make Gift Aid declarations for both the remaining part of that tax year and the whole of the next tax year (which starts on 6 April).

Allowing donors to cancel their authority

You must give donors the option to cancel their authorisation at any time by contacting you.

Donors must be able to set a specific date when they want the cancellation to take effect. If they don't specify a date, you must end their authorisation immediately.

Providing annual statements

Between 5 April and 31 May each year, you need to produce an annual statement covering the previous tax year. You must either send this statement directly to the donor or notify them it's been produced and explain how to access it.

When you don't need to send a statement:

• The donor only made one Gift Aid donation during the tax year
• The donor gave less than £20 in total during the tax year

What the statement must include:

• The total amount of donations where Gift Aid was applied
• The maximum amount of Gift Aid that can be claimed on those donations
• An explanation that donations made directly to charities or through other intermediaries aren't included in this statement
• A reminder that if the donor pays less Income Tax and Capital Gains Tax than the Gift Aid claimed in a year, they'll need to pay the difference

Record-keeping requirements

You must maintain records of the following:

• The date each donor gave authorisation, along with their name and address
• The date of any cancellations and the donor's name and address
• The date you explained to the donor that they must pay more tax than the Gift Aid on their donations
• The annual statement you provided or details of how you made it available to the donor

You must keep all these records for 6 tax years from the end of the year when the event occurred or the document was sent.

HMRC can request these records at any time. If you fail to provide them, you can receive a £300 fine plus additional daily penalties.

Penalties for non-compliance

Failing to meet your obligations as an intermediary can result in financial penalties.

You can be fined £50 for each failure to keep a required record or issue a statement. These £50 penalties can total up to £3,000 in a single tax year.

This £3,000 cap doesn't apply to the daily penalties charged for failing to provide records to HMRC when requested.

Who this applies to

This process is relevant if you're running an organisation that:

• Collects donations from individuals
• Passes those donations on to charities
• Wants to help charities maximise Gift Aid claims without requiring each donor to complete separate paperwork with every charity

Common examples include fundraising platforms, payroll giving schemes, and community organisations that pool donations for multiple charities.

Sources

• Create Gift Aid declarations for your donors as an intermediary

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.