Gift Aid is a valuable tax incentive for UK taxpayers, which enables charities and churches to claim an additional 25% on donations. However, to benefit from this scheme, it is crucial for charities and churches to maintain accurate Gift Aid records. In this blog post, we will discuss why accurate Gift Aid record-keeping is crucial for charities and churches in the UK and how it can help them manage their finances more effectively.
Firstly, accurate Gift Aid record-keeping ensures that donations are eligible for the scheme. A Gift Aid declaration from the donor is necessary to claim Gift Aid. It is a legal document confirming that the donor is a UK taxpayer and allows the charity or church to claim Gift Aid on their donation. Without this declaration, the donation is not eligible for Gift Aid. Keeping accurate records ensures that all donations have a Gift Aid declaration and thus qualify for the scheme.
Secondly, accurate Gift Aid record-keeping ensures that charities and churches claim the full amount of Gift Aid they are entitled to. By keeping accurate records of all eligible donations, including the amount donated, the date of the donation, and the name and address of the donor, charities and churches can avoid challenges when submitting Gift Aid claims to HMRC. Inaccurate or incomplete records may result in the inability to claim the full amount of Gift Aid.
Thirdly, accurate Gift Aid record-keeping helps charities and churches manage their finances effectively. By keeping accurate records, they can track their income and expenditure, identify areas for improvement, and ensure that they meet their financial targets. This information is crucial for financial planning, budgeting, and fundraising.
Finally, accurate Gift Aid record keeping helps to build trust with donors. When donors make a donation, they want to be sure that their money is being used effectively and efficiently. Charities and churches can show their commitment to transparency and accountability by keeping accurate records of all donations that are eligible for Gift Aid.
A lot of churches and charities find it cumbersome to combine the core responsibility of running an organisation with the day-to-day Gift Aid, bookkeeping and accounting tasks. This is why we recommend delegating such tasks to capable hands to enable you to focus on the more demanding tasks of organisational management and programme implementation. At GoodtoGive, we help charities and churches with Gift Aid management and their accounting needs. Get in touch with us today to learn about ways we can help you.