If you run a charity or amateur sports club then check out our guide to the changes to Gift Aid.
March is always a busy time as most charities come to the end of their financial year and begin the new one. But, this year will be particularly busy for the charities sector as HM Revenue & Customs introduce some significant changes to legislation including changes to the Gift Aid scheme and the introduction of Real Time Information (RTI).
Put simply, Gift Aid allows charities and CASCs to claim back the tax the donor has already paid on their donation. It can be a valuable source of income as it adds 25% to the donation value. In 2011-12 alone, Gift Aid claims totalled over £1bn.
Small Donations Scheme
The new Gift Aid Small Donations Scheme will benefit a wide range of organisations, enabling charities and CASCs to claim Gift Aid on small donations of £20 or less without collecting Gift Aid declarations. More information is due soon on how this will work, so keep an eye on the HMRC website for details.
Quicker and easier process
To speed up their current processes HMRC are introducing a new online claims system, aiming to pay online claims within 15 working days, compared to 30 working days for paper claims.
Charities will also be able to combine small individual donations rather than reporting them all separately. This will make it easier to make claims for activities like sponsored events, where many individuals have donated small amounts.
PAYE Real Time Information
April also sees the introduction of ‘Real Time Information’ (RTI). Charitable organisations operating their own manual systems with staff employed for just a few hours a month may see an increased workload. People who employ carers or domestic support are also affected and may need extra support with providing the information needed.
Busy New Year
As well as dealing with implementing these changes, most charities will also be setting budgets for 2013-14 – not an easy task when funding is scarce.
Charities will do well to see if savings can be made by changing suppliers, check if they can get a better rate on any deposited funds, and ensure costs are being correctly allocated to projects.
The increasing use of contracts also means many organisations are now paid in arrears, making cashflow management an essential, including chasing your debtors and making sure you’re not paying bills before they’re due.
None of these steps will compensate for losing a major funder or contract, but they can make a big difference to the bottom line.
To find out more about how Sage can help you with Gift Aid, take a look at Sage 50 accounts – it has several features designed especially for charities.
Margaret Wightman is the founder of Margaret Wightman Associates, which specialises in providing financial and management services to charities and social enterprises. She also acts as financial management advisor to Voluntary Organisations’ Network NE www.vonne.org.uk (VONNE), which is the regional infrastructure body for the voluntary and community sector in the NE region.
Margaret Wightman, founder of Margaret Wightman Associates