Q: We are to get a donation from a person who does not live in the UK and will pay the sum into an overseas bank account. Can he sign a Gift Aid declaration?
A: Donations by non-residents of the UK are eligible for Gift Aid provided the donors have income or capital gains charged with UK tax to a sum at least equal to the gross amount of the donation (i.e, the donation before deduction of basic rate income tax).
Whether or not an individual lives in the UK is not a factor that affects a Gift Aid donation. However, it could affect the basis of the donor's own tax liability on remittances made to the UK. The key issue is whether the donor is resident or not resident in the UK for tax purposes.
If an individual is a UK resident, the fact that he may not have paid sufficient UK tax does not disqualify the donation from the Gift Aid scheme - the donor simply owes the shortfall in tax to the Inland Revenue.
However, individuals who are not resident in the UK must have income or capital gains charged to UK tax that is equal at least to the gross amount of the donation. If individuals do not have sufficient income or gains brought into charge to account for the Gift Aid tax, then the donation fails the Gift Aid criteria.
A Gift Aid donation must be to a UK charity. It is immaterial whether the charity's bank account is in the UK or overseas. A payment into the account is a payment to the charity and it qualifies as a Gift Aid donation, provided it meets the other conditions of the scheme.
Finally, you should ensure that a valid declaration is obtained and kept for the Inland Revenue review and that the benefit rules are not breached.
- Pesh Framjee is head of the non profit unit at Deloitte and special advisor to CFDG. No liability arises to the author, his firm or Third Sector. Send your questions to firstname.lastname@example.org.