Gift Aid for School Charities

Monday 5th September 2011

HM Revenue and Customs (HMRC) have issued guidance on Gift Aid for school charities. A ‘school charity’ is used to describe any charity associated with the running of a school. This includes Academies, Independent Schools and State backed Free Schools.

The guidance does not change HMRC’s past practice but does provide a useful first point of reference for schools who are unsure whether HMRC would accept a given fundraising plan or income stream as eligible for Gift Aid.

Using Gift Aid effectively

Gift Aid allows charities to get an additional 25% on donations from individuals. The rules on Gift Aid can be subjective, particularly in relation to applications by schools. There are a number of situations where school charities and other charities do not make the most of Gift Aid or claim it incorrectly. We hope this guidance from HMRC will increase the overall use of the Gift Aid scheme.

Schools can go back 4 years (normally corresponding to 4 accounting periods) to obtain Gift Aid declarations for income they have received which they have now discovered is eligible for Gift Aid.

New guidance

The guidance clarifies the ability of schools to use Gift Aid in a number of common situations and also provide some helpful (although in some cases perhaps overly simplistic) examples.

The following table summarises the situations HMRC have used in their guidance and the ability to utilise gift aid. You will note that the general principal, that the donation must be an outright gift (i.e. not in return for any good or services*) remains key.

Circumstance	Gift aid claimable	Notes
Appeals to fund extra lessons	Yes	Providing no link between donor and pupils getting the lessons**
Non-uniform days	Yes	Providing no link between donor and pupils being allowed not to wear uniform**
Schools fees	No	This is a complex area and great care should be sought before trying to claim gift aid
Appeals towards school running costs	Yes	Providing no link between donor and pupils getting use of new books etc. **
Appeals to fund scholarships	Yes	Providing no link between donor and pupils getting scholarships.
Appeals to a general reserve fund	Yes	Providing no link between donor and pupils getting use of new facilities. **
Educational school trips	No	Generally run on cost basis. De-minimus gift aid benefit limits generally make use of gift aid for trips prohibitive.
Appeals to buy a minibus or other equipment	Yes	Providing no link between donor and pupils getting use of new bus or other equipment. **
Sponsored events	Potentially	To apply gift aid, attendance at the event must not be linked to any voluntary donation. For example an open event could be held with a suggested donation but if someone does not donate that should not preclude attendance at the event.
Payments to e-Learning Foundations	Yes	Providing no link between donor and pupils getting use of e-learning system. **
Building appeals	Yes	Providing no link between donor and pupils getting use of the building. **
Other fundraising events	Potentially	There are detailed rules and guidance for fundraising events that need to be considered before gift aid claims.

Please also note the above table is for quick reference and we would advise looking at HMRC’s guidance or contacting a tax adviser before attempting to claim gift aid.

In conclusion HMRC’s guidance highlights the potential for greater gift aid use by school charities but it also highlights some of the pitfalls and challenges.

Please do not hesitate to contact your usual Buzzacott contact or Luke Savvas if you would like to find out more about how this guidance will specifically impact and could benefit your school.

For HMRC’s full guidance go to http://www.hmrc.gov.uk/charities/gift_aid/rules/school-charities.htm