HMRC has clarified when Gift Aid can be claimed when someone dies. This is relevant where bank accounts are not closed immediately when someone dies and so regular gifts from deceased persons continue after the date of death.
HMRC confirmed that a Gift Aid declaration ceases to be valid upon the date of death because a person ceases to be an individual from the date of death as all assets become that of the estate, with any tax relief in the form of Inheritance Tax relief.
HMRC understand that charities continue to claim Gift Aid on donations in good faith until such time as they receive notification from the estate of the deceased.
There is an expectation that the charity would make an adjustment to refund the relevant Gift Aid to HMRC on any donations from the date of death once they have been informed of this.
This is slightly different from a person becoming a non-taxpayer where the date of Gift Aid not being eligible to claim being the date of notification to the Charity and not the date when that person ceases to be a taxpayer.
As a reminder, Gift Aid declarations are essential in order to claim Gift Aid. These need to have the following key information in order to be valid:
- the name of your charity or CASC
- the donor’s full name
- the donor’s home address
- whether the declaration covers past, present or future donations or just a single donation
- a statement that the donor wants Gift Aid to apply (this could be a tick box on a written or online declaration)
- an explanation that the donor needs to pay the same amount or more of UK Income Tax and/or Capital Gains Tax as all charities and CASCs will claim on the donor’s gifts in a tax year and that the donor is responsible to pay any difference.
It is possible to receive verbal declarations, but these must be followed up by the charity issuing a written confirmation to the donor with the above information and also letting them know that the declaration can be cancelled within 30 days. This letter and/or the verbal recording should be retained.
Written declarations can also be cancelled, but not for one off donations. Records of cancellations should also be kept.
Read the latest Charities and Non-profit newsletter to find out more about further changes that will impact the sector.
If you would like to discuss how the points raised in this article might affect you, please get in touch with our team.
This article was correct at the time of publishing.
