How do I allocate Gift Aid income from HMRC?
This article explains how to allocate Gift Aid income within ExpensePlus (depending on whether you create accounts on an accruals basis, or a receipts and payments basis).
In this article:
ExpensePlus creates separate claims for each fund, making it easy to allocate payments from HMRC to the correct fund.
Note: Where restricted donations are given, as well as the donation needing to be recorded to the restricted fund that it relates to, any Gift Aid also needs to be recorded to the same restricted fund (unless the donor has specified otherwise).
How often should I claim Gift Aid?
Some organisations claim Gift Aid monthly, quarterly or yearly. Whilst the frequency you claim Gift Aid is up to you, the process within ExpensePlus is super straightforward.
We would recommend claiming Gift Aid monthly (once the transactions for the previous month have been reconciled), and this is typically what most churches and charities do.
Top Tip: Gift Aid often accounts for a significant part of most organisations' income. Claiming Gift Aid monthly not only helps with cash flow, but it keeps both budgeting and reporting super straightforward as well.
Typically, GASDS is either claimed monthly as well, or annually at the end of the tax year - again, the frequency is up to you.
Note: ExpensePlus only allows each donation to be part of one Gift Aid claim, regardless of the frequency at which Gift Aid is claimed.
Accruing Gift Aid Income
When creating accounts on an accruals basis, Gift Aid will need to be accrued based on the dates of the donations it relates to (rather than the date that the money is received in from HMRC).
Note: if you create accounts on a receipts and payments basis, skip to the next section (as this section isn't relevant for your charity).
Where auto-accruals are enabled, ExpensePlus will automatically accrue Gift Aid income for you as part of the process flow for submitting a Gift Aid claim (see the pop-up shown below).
The accrual date in the popup will default based on the dates of donations within the claim, but this can be custom-set. Gift Aid income will automatically accrue based on the date set, and the accrual will be shown on the balance sheet.
Where Gift Aid has been auto-accrued, it's important when reconciling HMRC Gift Aid income to use the income type of 'Gift Aid Claim', then simply select the Gift Aid claim the income relates to.
If any interest has been added by HMRC, you can allocate this amount within the same pop-up.
Important: Where Gift Aid has been auto-accrued, it's really important that it's not allocated as 'Other Income' as this will result in the income being counted twice, and the balance sheet wrongly showing an outstanding Gift Aid accrual.
Note: if you create accounts on an accruals basis, but have auto-accruals disabled, then you will need to manually accrue for Gift Aid as part of creating year-end accounts.
Reconciling Gift Aid Income
Where Gift Aid income hasn't been auto-accrued, when reconciling HMRC Gift Aid income, simply select the transaction on the left-hand table of the match transactions screen.
Click the + button, select the 'Other Income' option, then add transaction details, selecting the appropriate fund/category
Note: where Gift Aid has been auto-accrued, please see the section above for how to reconcile Gift Aid income
Note: You can identify Gift Aid claims by the claim reference number, which you can view in the 'Completed Gift Aid claims' screen. This reference is also stated on your Gift Aid letter from HMRC once the Gift Aid has been paid into your account.
To better understand the Bank Reconciliation module, please view the module overview video here.