Academy trusts are continually seeking ways to maximise income and secure additional resources. One often underutilised opportunity is Gift Aid - a government tax relief scheme that allows charities, including academy trusts, to increase the value of donations they receive from individuals.
The Gift Aid opportunity for academy trusts
Academy trusts, as exempt charities, are eligible to claim Gift Aid on voluntary donations made by UK taxpayers. Gift Aid allows the academy trust to reclaim the basic rate of income tax on donations, effectively increasing the value of eligible donations by 25% at no extra cost to the donor.
For example, a £100 donation becomes £125 once Gift Aid is applied. For many trusts, this can represent a valuable additional income stream that can be directed towards:
- educational resources
- infrastructure improvements
- extracurricular activities
- special educational needs provision
- other charitable activity aligned initiatives.
Given the increasing financial pressures in the sector, fully utilising Gift Aid can make a significant difference.
Eligibility criteria
To benefit from Gift Aid, donations must meet HMRC’s qualifying criteria:
- the donor must be a UK taxpayer who has paid income or capital gains tax equal to the amount the academy trust is reclaiming
- donations must be voluntary, with no significant benefit provided to the donor in return
- payments for goods, services or mandatory parental contributions do not qualify.
Examples of eligible donations include:
- general fundraising appeals
- non-uniform days
- voluntary contributions for trips (in certain circumstances)
- alumni donations
- unrestricted giving campaigns.
It is important that academy trusts carefully assess the nature of each donation to ensure eligibility.
How your academy trust can register for Gift Aid
To claim Gift Aid, your academy trust must first register with HMRC as a charity for tax purposes, even though it may already hold exempt charitable status with the Department for Education. The registration process involves:
1. Submitting an application to HMRC
Complete and submit form ChA1 - Application for recognition as a charity for tax purposes. The form is available directly via HMRC: Apply to HMRC to recognise a charity for tax purposes (ChA1 form)
2. Providing supporting documentation
HMRC may request governing documents, the trust’s constitution, and information about trustees.
3. Receiving HMRC charity reference number
Once approved, HMRC will issue a unique charity reference number, which enables the academy to submit Gift Aid claims.
4. Registering for HMRC Online Services
The trust must also register for Charities Online, HMRC’s digital service for submitting Gift Aid claims.
Systems and controls: meeting HMRC requirements
Effective internal systems and robust controls are essential to ensure ongoing compliance and to facilitate smooth Gift Aid claims.
Key considerations include:
1. Gift Aid declarations
- obtain a valid Gift Aid declaration from each donor prior to claiming
- declarations must include:
- donor’s full name and address
- confirmation of UK taxpayer status
- statement authorising the academy trust to claim Gift Aid.
2. Record keeping
- maintain accurate, secure and accessible records of:
- all Gift Aid declarations
- donations received
- dates and amounts of donations
- correspondence with donors.
HMRC requires records to be kept for at least 6 years.
3. Donor due diligence
- ensure that donors understand the tax implications
- avoid claiming Gift Aid on donations where the donor has not paid sufficient UK tax.
4. Staff training and awareness
- ensure finance staff and fundraisers are fully trained on Gift Aid regulations and procedures
- periodically review processes to reflect any legislative changes.
5. Gift Aid Small Donations Scheme (GASDS)
For small cash or contactless donations (under £30), academy trusts may also benefit from GASDS without requiring individual declarations, subject to certain limits and conditions. Further guidance on GASDS can be found here.
Further HMRC guidance
HMRC provides comprehensive guidance on Gift Aid for charities, which academy trust CFOs, finance teams and trustees should familiarise themselves with:
➤Gift Aid guidance for charities (HMRC Charities Manual)
➤Claiming Gift Aid as a charity (GOV.UK)
In summary
While often overlooked, Gift Aid offers academy trusts a highly effective means of increasing voluntary income. With the correct registration, controls and ongoing governance, trusts can unlock valuable additional resources to support their educational activities.
Compliance with HMRC’s regulations is critical to avoid any financial or reputational risks.
If your academy trust would like advice or assistance in registering for Gift Aid, reviewing your existing systems, or implementing the necessary controls, please do not hesitate to reach out to Luke Grubb, or your usual UHY Hacker Young academy adviser.
