Research consultancy recommends overhaul of system including National Insurance counting as an eligible tax
Charities are continuing to miss out on hundreds of millions of pounds in Gift Aid as it is too complicated to claim according to a third sector research consultancy.
NfpSynergy said over half of charities don’t claim it, adding they need to combine forces to lobby the next UK government to have the claims procedure simplified.
Its latest report Give and Let Give makes a number of recommendations for changes including making online donations below £5 automatically qualify for Gift Aid.
NfpSynergy’s co-founder Joe Saxton pointed to a recent estimate by the Charities Aid Foundation which worked out £750 million is unclaimed by charities each year as reason for change being needed.
“There is little doubt that Gift Aid has brought huge financial benefits to charities since 1990, making a monumental difference to their ability to do great work. That said, the system is nearly 25 years old and some reform is needed to make it even better,” Saxton said.
There is little doubt that Gift Aid has brought huge financial benefits to charities ... that said, the system is nearly 25 years old and some reform is needed to make it even better
“We’re calling for some amendments to the system, but also for the sector to agree what it wants and to come to the government with one powerful voice.”
The Give and Let Give report evaluates Gift Aid since its inception in 1990 and found only 2% of charitable income is currently made up of Gift Aid donations but suggests it could be much higher.
As Gift Aid requires the donor to be a UK tax payer the report recommends national insurance should be treated as a tax so those who will stop paying income tax when the threshold rises are still eligible.
The report also states that one of the barriers against people signing off on Gift Aid with their donations is that they don’t know if they pay enough tax and are scared HMRC could reclaim the gift aid amount directly from them. To combat this NfpSynergy suggests the charity receiving the money should reimburse HMRC if there is a need to, and not the individual.
In a rallying call to charities across the UK, Saxton added: “There are millions of pounds to be had without having to ask people for any more money and with a potential change of government less than six months away, it’s crucial to start preparing now.”
