After a lengthy consultation process with charities, mobile service providers and industry trade organisations, the government will finally introduce changes designed to make it easier to give and collect Gift Aid. But these concessions fall woefully short of the industry’s ultimate goal: a universal Gift Aid declaration.
Until now, it has been possible only to make Gift Aid declarations directly to a registered charity. New legislation due to come into effect next April will enable specialist payment intermediaries to receive declarations directly and use them to claim Gift Aid on behalf of the charities they represent.
This sounds great, but how effective these changes really are in boosting the volume of Gift Aid a charity collects remains to be seen. You have to wonder just how many people give to more than one charity through the same payment intermediary. And how many donations does a person really make in one tax year through the same payment intermediary?
Clarity required from HMRC
If charities are to take full advantage of these changes, it’s going to be important for HM Revenue & Customs to provide clear and concise guidance. For example, HMRC should provide a register of those intermediaries permitted to operate charity payments under the new rules so charities can make informed decisions in light of these proposed changes.
HMRC will also need to make it clear to charities that there will be a difference in validity periods for Gift Aid declarations. The Gift Aid declarations collected directly by the charity can be valid for up to four years before and a number of years ahead, whereas the Gift Aid declarations collected by an intermediary are valid only for the tax year in which they have been declared, with a small allowance to start the validity year a month early.
The benefits a charity gains through these changes will depend largely on how proactive they are in creating new frictionless user journeys that take account of the additional need to renew Gift Aid declarations to intermediaries annually. This will be important so that the donor understands why and how the provided personal information is used to claim Gift Aid.
Moving towards the end game
These Gift Aid changes could be seen as just another concessions from a government under increasing pressure to introduce a universal Gift Aid declaration. If this was granted, donors would need to make only one central Gift Aid declaration, through an online portal, where their personal data would be securely held in an online vault so that any charity or intermediary could reference it to process their Gift Aid claims.
This secure store of universal Gift Aid declarations would benefit charities directly because they would be asking fewer donors to complete Gift Aid declarations. Donors would receive clear and compliant communication regarding their eligibility for Gift Aid every time they made a donation via mobile. There would also be a clear separation between personal data used for payments and for marketing purposes.
When it comes to supporting the charity sector, we’ve got a lot to thank HMRC for. But there’s still work to be done if charities are to benefit fully from Gift Aid, regardless of the channels their donors choose to donate through.
Rob Weisz is chief executive of Fonix