Gift Aid claims by charities fall for the second year in a row

Howard Lake | 11 October 2013 | News

Figures from HMRC for the 2012/13 financial year show that £1,002 billion was repaid to 63,740 charities making Gift Aid claims, a 5% drop from 2011/12 which recorded 66,370 claims totalling £1.052 billion. This is the second year in a row that the total reclaimed has dropped from its 2010/11 peak of £1,071billion.
In spite of this, numbers still remain considerably above what was reclaimed in the pre-recession years of 2007/08, when £895 million was re-claimed by charities.
On the face of it this appears to be a worrying trend for charities. On the other hand the underlying picture is more complex.

Effect of reduced income tax rate

In April 2008 the basic rate of income tax was reduced from 22% to 20%. This had an impact on reducing the amount of Gift Aid which could be recovered by charities. In order to ease this problem, the government agreed to provide transitional relief on donations made for the following three years.
The value of transitional relief has been declining over the past few years; from £120 million in 2010-11 to £50 million in 2011-12, and then to zero in 2012-13. It is this decline in transitional relief which has driven the overall fall in recovery of Gift Aid. In fact the amount claimed for underlying Gift Aid (excluding transitional relief) has actually continued to increase during the years of 2010/11 through to 2012/13.

Underlying Gift Aid has grown since 2008

So, despite the headline figures suggesting a decline, the underlying trend is positive for Gift Aid claims. Indeed, the value of claims on underlying Gift Aid, excluding the transitional relief element, has continued to grow from 2008/09 to 2012/13 despite the difficult economic times.
The one element of data that might be less positive is the decline in the number of charities making Gift Aid claims. However, this figure has fluctuated over the years, with no clear trend.
 

About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale. He is the founder of Fundraising Camp and co-founder of GoodJobs.