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January 2016

Charities feeling the pinch of the North Sea downturn need to maximise Gift Aid contributions, advised Hall Morrice LLP


Fund-raising can be a tricky task at the best of times, but the current economic climate has made things even harder for charities and community amateur sports clubs (CASCs) in the north east of Scotland.

With money tight and over 65,000 already losing their jobs in the oil and gas industry and the various sectors supplying it, charities could face some challenging times ahead. They may find it difficult to convince individuals to commit to a donation, no matter how worthy the cause, but luckily, there is a lifeline.

Gift Aid provides a significant extra revenue stream for registered organisations every year, allowing good causes to claim an extra 25p on every 1 donated. However many charities and CASCs could be claiming more - especially with upcoming changes announced in this year's Budget.

Shonagh Fraser, partner at Aberdeen-based accountancy firm Hall Morrice, says, "Over the years I have worked with numerous charities and CASCs in the north east, and in my experience many are missing out on vital funds that could aid their operations.

"With wage cuts, lower profits and redundancies playing on many people's minds, individuals are perhaps not feeling as generous as they may have once been. 64% of oil and gas firms have reduced their workforce this year, meaning many people in Aberdeen city and shire have less disposable cash available to them.

"And, of course, oil companies - which have been incredibly generous to local community groups and charities over the years - may also be cutting back on funds available to commit to charitable projects.

"The knock-on effect of this is that many are donating less to good causes, so it is important that charities and CASCs are able to capitalise on all available schemes in order to maximise their fund-raising."

Under the standard Gift Aid scheme, donors must complete a Gift Aid declaration form, stating that they have paid at least as much in income tax or capital gains tax in that tax year as the charity or CASC will claim in Gift Aid. If the donor has not filled out a form, many organisations write off a Gift Aid claim, when in reality they could still be raising vital extra funds.

Shonagh continues, "If the donor has not filled out a form, registered organisations can still claim using the Gift Aid small donations scheme if the donation is of 20 or less. Charities and CASCs can currently claim up to 1,250 in any given tax year using this scheme, without the requirement for a signed declaration. As of April 2016, this will increase to 2,000 - meaning local good causes could stand to significantly increase their takings."

To claim through the small donations scheme, the charity or CASC must meet the following criteria:

  • Must have existed for at least 2 complete tax years (unless recently merged with another).
  • Must have claimed Gift Aid in the same tax year as the small donations scheme claim.
  • Must have claimed Gift Aid in at least two of the last four tax years (but without a two-year gap between the claims).
  • Must have claimed Gift Aid without getting a penalty in the last two years.

"Under the small donations scheme, charities and CASCs can claim up to 10 times their Gift Aid claim, or on 5,000 of small donations. In April, this limit will increase to 8,000 which will provide a significant boost to those charities and CASCs operating in Aberdeen and the surrounding area," says Shonagh.

While Gift Aid cannot be claimed on membership fees, donations through payroll giving, or donations from limited companies, there are still many other opportunities to claim. Charities may also be able to claim on up to 5,000 of small donations collected in community buildings - including village halls and religious buildings - if the event is open to the public and there are 10 or more people present who will benefit from the charitable activity. Charitable events held by CASCS in community buildings are not eligible.

Shonagh adds, "When claiming on donations collected in community buildings, charities cannot charge an entry fee meaning that normal fundraisers - like coffee mornings and jumble sales - do not qualify.

"Charities must hold events in a community building at least six times a year for it to be eligible - but there is no limit to the number of eligible community buildings that a charity carries out its charitable activities in.

"Therefore if a charity uses three community buildings and also collects elsewhere, for example on the street, they could currently claim on up to 20,000 of small cash donations in one tax year.

"With the Budget changes that will soon come into effect this figure will only rise, which is why all charities and CASCs in the north east should ensure they are utilising Gift Aid to its fullest potential."

To make an eligible Gift Aid small donations scheme claim, charities and CASCs must keep accurate records of all donations, including the total of all cash donations collected, the date of collection, and the date it was paid into a bank account.

For collections in community buildings, charities should also record the address of the building, the type of event, and an estimate of how many people attended.

Claims for Gift Aid and the Gift Aid small donations scheme can be made through HMRC's Online Services portal.

Founded in 1976, Hall Morrice is one of Scotland's leading independent firms of chartered accountants and has offices in Aberdeen and Fraserburgh. Based at 6 and 7 Queens Terrace in Aberdeen, Hall Morrice can be contacted on 01224 647394 or at

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