However an equal amount is currently going unclaimed, as a result of charities and voluntary groups not taking full advantage of this money-maker. Approximately 16% of PTA-UK members are actively claiming Gift Aid, meaning 84% are not; is your PTA missing out on what essentially is money for nothing?
Q: What is Gift Aid?
A: Gift Aid is quite simply free money and a great way to boost your PTA's income. The official terminology from HM Revenue and Customs (HMRC) is: 'Gift Aid is a tax relief which allows a charity to reclaim from HMRC the basic rate of Income Tax a donor has paid on their donation (gift).' In layman's terms this means that your parents and other supporters, who are current UK tax payers are eligible to Gift Aid their cash donations, which gives your PTA an extra 25p for every £1 donated.
Q: How does Gift Aid work?
A: When a UK taxpayer makes a monetary donation to your PTA (that is an outright gift), they have already paid tax on that money. Your PTA can, through Gift Aid, reclaim the tax paid. As an example, a parent who is a basic tax payer will pay 25p tax for every £1.25 they earn. So by asking your supporters for permission to reclaim the tax they have already paid on their donation, you can increase the value of such donations by a whopping 25%!
Q: What are the rules?
A: Your PTA will need to register with HMRC, we cover this below and the donor, i.e. your parents or other supporters cannot receive goods or services in return for their cash gift. Some instances where Gift Aid could be applied include:
- Non-uniform days - the payment to enable the pupil to not wear school uniform on a specified day can be Gift Aided as long as pupils are permitted not to wear uniform, whether or not a donation has been made. If the donation is compulsory, then Gift Aid cannot be claimed.
- Sponsored events - as long as the supporter receives nothing in return, then donations made through sponsored activities such as fun runs, sponsored bounce, read, spellathon etc can be subject to Gift Aid.
- Ticket entry to a PTA event - payments for such tickets cannot be Gift Aided but a voluntary donation on top of the minimum ticket price, can.
Q: How does your PTA qualify for this 'free' money?
A: There are some things you need to do:
- All PTAs: you'll need to apply to HMRC for confirmation that your PTA is a charity entitled to claim UK charity tax reliefs. This is a fairly straightforward process; once approval has been given your PTA will receive a special reference number and confirmation of the date the entitlement to claim Gift Aid begins.
- If legally you are required to register with the relevant charity regulator then you are required to do this before you apply to HMRC. So if your PTA is based in England and Wales and it currently has an income in excess of £5,000 per annum, then you will also be required to register with the Charity Commission for England and Wales. PTA-UK members with our model constitution in place can fast track their application which is likely to be approved within 10 working days. Visit pta.org.uk for more information on charity registration and the benefits.
- If your PTA is based in Scotland, you need to apply to the Office of the Scottish Charity Regulator (OSCR), if you are required to register, before applying to HMRC to be recognised for Gift Aid.
- In Northern Ireland there is currently no requirement to register with the Charity Commission for NI, so PTAs should simply apply to HMRC, as detailed above.
Q: What happens next?
A: HMRC will check your application to ensure that your PTA is entitled to claim Gift Aid. As long as no additional information is required, you will receive a unique reference number which will enable you to get started.
Q: So, how do we get started?
A: Firstly you'll need to ask eligible parents and other supporters to confirm that they are UK taxpayers. The next is to ask them to complete and sign a Gift Aid declaration form, which you should then keep on file. This form should include the donor's full name and address and the name of the PTA. Make this explicit to donors by explaining you can't receive Gift Aid without this information otherwise people might try to cut corners. You only need to ask your supporters to complete one form as this provides cover for every gift made to the same charity, for whatever period the parent chooses and can cover gifts they have already made and/or gifts they may make in the future. More information and a sample declaration form is available from hmrc.gov.uk.
Q: How does your PTA claim Gift Aid?
A: You need to submit your claim using the official documentation provided by HMRC and available via their website. You'll need to enter the details of each Gift Aid donation onto the form, which should be signed by the person you nominated as the authorised signatory as part of the Gift Aid registration process. You can nominate additional authorised signatories by contacting HMRC. All payments due are then paid directly into the PTAs bank account - it's as simple as that!
Q: Where do we go to for additional guidance?
A: PTA-UK has written an Info sheet on Gift Aid, and HMRC produce a useful Gift Aid Toolkit.