HMRC will still pay back only at the basic rate of 25 per cent. The additional three percentage points constitute a concession from a different pot of money.
Some charities are likely to become confused and frightened by these changes and withdraw further from claiming free Gift Aid money. But they shouldn't do. They would do better to grab it and make the most of this opportunity.
There are now three years at the interim rate during which charities can review their fundraising and Gift Aid recovery. When doing so, it would be sensible to consider the following questions.
First, are you collecting Gift Aid on all your regular donations and appeals, including sponsored events and other fundraising events? Second, do all your Gift Aid declarations and other documentation and processes comply with all HMRC's requirements? Finally, have you looked at all your fundraising activities, including dinners, auctions, sponsored events and community fundrai sing events to ensure that no opportunities for Gift Aid are being overlooked?
It is often possible to structure activities and events so they can be Gift Aided where this would not normally be thought of as possible. If you feel that Gift Aid is too complicated and beyond your capabilities, call in a professional or specialist. You may be happy changing a plug, but you wouldn't attempt to rewire your whole house.
I believe this change in tax rate is a wake-up call to charities to pursue Gift Aid as actively and as relentlessly as possible. If we do go into economic downturn and people start losing jobs or earning less, donations to charity are likely to fall.
New donations will be even harder to find. It seems that the Government has quietly recognised this warning of tough times ahead and is advising charities to plan accordingly. The interim tax rate gives charities time, and you should take this as advance notice to start doing everything you can to ensure you are as efficient and profitable as possible in claiming all the Gift Aid available.
In Aesop's fable The Ant And The Grasshopper, it was the ant that took note of the prevailing and impending environment and conditions and planned for the events to come, and was thus able to prosper.
- Barry Gower is managing director of Gift Aid recovery and consulting service Gain.