What’s Happening With Gift Aid in 2013?

You may have heard about some changes coming in 2013 about Gift Aid, so I thought I’d take some time to outline Blackbaud’s plans on that.

Gift Aid is the UK Government scheme to assist charities in claiming back the element that would have been paid in tax for a donation by a UK tax payer. It’s administered by HM Revenue & Customs (HMRC).

Late last year, HMRC announced to many organisations some changes that they have been formulating for some time. This article summarises these changes and let’s Blackbaud customers know how we’re changing our software in 2013 to accommodate.

The two changes are:

• 
  
• The Gift Aid Small Donations Scheme, allowing small donations to get a top-up gift from the government without having to record a Gift Aid declaration.
  
• Direct submitting of Gift Aid claims, removing the need for an R68 form. This is known as “Charities Online”.
  

Gift Aid Small Donations Scheme

The aim of this scheme is to reduce the admin related to very small Gift Aid gifts, it passed into law in December 2012 and some announcements are planned for January 2013 around how it will be implemented.

Essentially, a charity gets to claim the “Gift Aid” amount for a donation without a Gift Aid declaration.  The scheme is designed around a collection plate at a place of worship, or similar small collections from small organisations.  As there is no Gift Aid declaration, this is not a “Gift Aid” payment but a “Top-Up” payment.

Although the rules are yet to be finalised, there are some caveats that are expected:

• 
  
• The maximum donation per donor is £20.
  
• You can claim on a maximum of £5,000 in a financial year. That equates to a maximum £1,250 additional Top –Up revenue per year.
  
• The charity must already have a Gift Aid claim history.
  
• The donation must take place in a “Community Building” or similar.
  

As the scheme currently stands, the Top-Up payment claims would be made alongside other Gift Aid claims and therefore Blackbaud software will be able support this process, which I discuss further below. If that’s the case, we’ll update our documentation and post information on how to best undertake this process in our software.

Aside from the software impact, we are aware that various consultations are taking place on how practically viable this scheme is for the level of income that it generates. Do also stay tuned to the great Institute of Fundraising for the results on their consultation on this over the next month. Therefore, we are awaiting the official announcements of the plan, and to learn more about how you plan to implement this scheme, before we plan any changes.

Charities Online
The Gift Aid process is changing in April 2013, as HMRC has launched three formats to replace the R68i form which is currently used by charities to reclaim the basic income tax portion of a donor's gift. This is part of the government Digital by Default strategy. The three formats are:

1. 
   
2. Claim Using External Software  - HMRC wants customers to move to having their “R68i” transmitted directly to HMRC from authorised fundraising software. This is quite exciting for us, as it allows a Gift Aid claim to be directly transmitted from The Raiser’s Edge.
   
3. Claim Using a Paper Form   - For charities with very few donations, a manual process will be created to allow a small amount of Gift Aid donations (90 in fact) to be claimed on a paper form.
   
4. Claim Online  - Following an initial consultation last year, a spreadsheet process has been created that will allow up to 1,000 donations to be claimed via an excel output. The Raiser’s Edge, Blackbaud CRM and eTapestry are set-up to allow this today, so we have this process in hand.
   

Read more about these changes.

This is a really exciting change that ultimately will make the R68 submitting easier for you. However, with the announcement yet to out to all charities, and testing on the new process not yet possible, it’s a tight timescale to make the change for both Blackbaud and our customers!  Of course the Paper Form process will work for everyone, so here’s what we are planning to do for Raiser’s Edge users:

“Claim Using External Software”   We plan to implement this in The Raiser’s Edge version 7.92 with the latest patch at the time of the launch of the new scheme.  Through this change, we plan to be able to send the Gift Aid submission directly to HMRC from The Raiser’s Edge. If you like to be involved in the designs of this, and being an early user testing the new system, please sign-up to our  Discovery programme.  We’ll have more details to share in the coming weeks and months.

“Claim Online” – If you aren’t able to upgrade The Raiser’s Edge, or don’t have many donations per year, then you’ll be able to use Query in The Raiser’s Edge to create the spreadsheet required for the “Claim Online” process. We’ll publish some “how-to” steps in the run-up to the April launch of the new processes.

We gather that there will a period when the “old” paper or CD R68i process will be allowed to run alongside the new process, but exact dates haven’t been confirmed and we hope to see that in the HMRC announcements in coming weeks.

This is a big change for many organisations, we’re excited to be making these changes, and we’re eager to ensure the process for you is as smooth as possible.  Stay tuned for more information!

Check out the What’s Happening With Gift Aid in 2013 – Update  blog for more information.