Since 6 April 2016, individual partners have had to make their own Gift Aid declarations when a partnership makes a donation to a charity or CASC. This reflects the correct legal position that each partner has made a donation. Each partner’s Gift Aid declaration must contain their name and full home address and be given to the charity or CASC. The amount of each partner’s share of the whole donation also needs to be specified in their declaration or in any supporting correspondence given to a charity or CASC.
In order to obtain tax relief, the partners should enter their share of the donation on their own self-assessment tax return. How the donation is apportioned between the partners is a matter for them to decide. It could be apportioned in:
- equal shares;
- accordance with their share of the partnership profits set out in the partnership agreement;
- whatever split the partners agree.
There are additional reporting requirements for the charity or CASC as they need to record the name and address of each partner that makes a Gift Aid donation and show them separately on the Gift Aid schedule when it makes its claim for repayment of tax to HMRC. This is an additional burden for the charity or CASC especially in cases of donations by partnerships with numerous individual partners.
It is possible to minimise the administrative burden of making continual Gift Aid declarations for each partner every time a donation is made by the partnership. This can be done by the setup of a charitable foundation into which the partnership makes a large annual or regular donation. This donation would be subject to the rules covering Gift Aid declarations set out above. However, the foundation can then make charitable donations as it sees fit without the need for further Gift Aid declarations to be made.
Clearly this could be advantageous for a partnership which makes numerous smaller donations throughout the year especially if there are a lot of partners. There would be ongoing costs in connection with running the foundation, but depending on the level of charitable donations a partnership is looking to make, this may be an option worth considering.
Please contact your usual Moore adviser for further information.