HMRC has removed the requirement to use a mandatory template for the end-of-year retail gift aid tax letters for charities operating Methods A and B. This follows lobbying from ourselves, members, and the Charity Tax Group for changes to make the letters easier for donors to understand and less intimidating.
In place of a requirement to use a mandatory template, HMRC’s new guidance permits charities to produce their own end-of-year letters, provided they include the following:
the full name and address of the charity
the name of the donor — a Gift Aid declaration held by the charity must include the donor’s home address
total net proceeds from the sale of the goods
tax years impacted for the donor
a reminder that the donor must notify the charity if any of their details have changed
Where net sale proceeds exceed £100 in a year for method A or £1,000 for method B, the charity must:
ask the donor to confirm the amounts raised
confirm the donor is happy to donate the proceeds over these limits to the charity
The donor must notify the charity within 21 days if they do not wish to donate the excess proceeds.
In addition to the points above, charities' emails/ letters must include the following additional information:
Charities can claim Gift Aid worth 25% of your donation, without any cost to you, as long as you are:
a UK taxpayer
charged at least the same amount in income tax or Capital Gains Tax (or a combination of the 2) in the tax year
If you have not been charged tax at least equal to the amount of Gift Aid, it’s your responsibility to pay any difference to HMRC.
Your status as a taxpayer making Gift Aid donations can change from one tax year to the next. If this letter or email is about Gift Aid in more than one tax year, please think about the tax you were charged in each year. You must also notify the charity if you are no longer a UK taxpayer paying Income Tax or Capital Gains Tax.
We claim Gift Aid on the net sale proceeds from the sale of your goods. We work this out by deducting our commission plus VAT from the gross sale proceeds.
Contact us if you no longer want us to claim Gift Aid on your donation or if your name or address have changed. You can cancel your Gift Aid agreement with us at any time.
This additional information could be included at the bottom of emails or on the reverse of physical letters to ensure the main body of the letter is as simple as possible.
The updated guidance means all end-of-year letters need to be updated to meet the new requirements. We are currently producing a template that meets the above requirements for use by members.
For more information, click here.
