How to claim Gift Aid as a church: a step-by-step guide

How much is Gift Aid worth to a church?

Gift Aid treats a gift as if basic-rate tax had already been taken off it, and lets your church claim that tax back: 25p for every £1. Someone who gives £10 a week and ticks the Gift Aid box adds £130 a year to your church’s income, at no extra cost to them.

Who can claim Gift Aid?

Your church can claim Gift Aid if HMRC recognises it as a charity for tax purposes. That’s a separate step from registering with a charity regulator:

• Registered charities still need to apply to HMRC. Registering with the Charity Commission, OSCR in Scotland or the Charity Commission for Northern Ireland doesn’t do it for you.
• Excepted churches in England and Wales, which don’t have to register with the Charity Commission, can apply to HMRC directly.
• Small charities in England and Wales with income under £5,000 a year don’t have to register either, and can also apply to HMRC directly.
• Churches within a larger body should check first. In some denominations the diocese, circuit or a central office claims Gift Aid for its churches.

Not sure where your church stands? See does your church need to register as a charity?

Which gifts can you claim Gift Aid on?

You can claim on money given by an individual who:

• has made a Gift Aid declaration to your church,
• pays enough UK Income Tax or Capital Gains Tax in that tax year to cover the Gift Aid on everything they’ve given to charities,
• is giving their own money, not money collected from other people or given by a business, and
• isn’t receiving anything in return, beyond small thank-you benefits within HMRC’s limits.

You can’t claim Gift Aid on:

• payments for something, such as wedding or funeral fees, tickets, meals, raffle entries or things you sell,
• gifts from companies, which get tax relief in a different way,
• money someone collected from other people and hands over as a single gift,
• gifts from people who don’t pay enough UK tax, or
• loose cash in the plate with no declaration. For that, the Gift Aid Small Donations Scheme may let you claim a top-up instead.

How to claim Gift Aid, step by step

1. Get recognised by HMRC as a charity

   Apply online for recognition as a charity for tax purposes. HMRC asks about your church’s governing document, its bank account and the people who run it, and you nominate up to two “authorised officials” to deal with HMRC. If your church has to register with a charity regulator, do that first. Once HMRC accepts you, it gives you an HMRC charities reference, which goes on every claim.

2. Collect Gift Aid declarations

   Ask givers to make a declaration online, on paper or by phone. One “enduring” declaration can cover all of a giver’s future gifts and any gifts in the past four years. Use HMRC’s model wording: see Gift Aid declaration wording.

3. Keep a record that links each gift to a declaration

   For every gift you claim on, you need to be able to show who gave it, when, how much, and which declaration covers it. Bank statements, giving records and envelope records all count. HMRC can ask to see them when it checks a claim.

4. Sign up for Charities Online

   Your church needs a Government Gateway user ID. Sign in, enrol for Charities Online using your HMRC charities reference and the details HMRC holds about your church, and wait for HMRC to post an activation code to the church. It can take about a week to arrive, and it has to be used within 28 days.

5. Prepare the claim

   List each gift on HMRC’s schedule spreadsheet: the giver’s title, first name, surname, house name or number and postcode, with the date and amount. A spreadsheet holds up to 1,000 lines. Gifts of £20 or less from different givers can be added together on one line, up to £1,000 a line. Most church giving software prepares this file for you.

6. Send the claim and get paid

   Sign in to Charities Online, attach the spreadsheet and send the claim. HMRC usually pays within about four weeks, straight into the bank account it holds for your church.

7. Record what you claimed

   Mark which gifts each claim covered, so nothing is claimed twice. If a gift you claimed on is later refunded, or a declaration turns out not to be valid, correct it with an adjustment on your next claim.

How often should a church claim Gift Aid?

As often as suits you. Many churches claim monthly or quarterly, so the money arrives steadily rather than in one lump at the end of the year.

The deadline is four years after the end of the financial period the gift was received in. That’s the tax year (6 April to 5 April) for a charitable trust, or the accounting period for a charitable company or CIO. Gift Aid you don’t claim in time is lost, so don’t let claims pile up.

Can you claim Gift Aid on cash collections?

Yes, if the cash comes in a Gift Aid envelope or with a declaration that identifies the giver, so you can record who gave what. Loose cash in the plate can’t have Gift Aid, but your church may be able to claim a top-up on up to £8,000 of small cash and contactless gifts a year through the Gift Aid Small Donations Scheme.

Can you claim Gift Aid on paper?

If you can’t use Charities Online, HMRC accepts claims on paper form ChR1, which you request from HMRC. Online claims are quicker to send and quicker to be paid, so it’s worth signing up if you can.

Common Gift Aid mistakes churches make

• Claiming without a valid declaration, or with one that doesn’t include the giver’s home address.
• Leaving out the house number or postcode on the claim.
• Claiming on gifts that were later refunded, or claiming the same gift twice.
• Claiming on payments, such as tickets, meals or fees.
• Claiming on money collected from several people, such as a house group’s collection, as if one person gave it.
• Not acting when a giver says they’ve stopped paying tax or moved house.
• Leaving it too late: gifts older than the four-year limit can’t be claimed.