Gift Aid and the pitfalls of digital giving

charity donation image
Donald-Drysdale By Donald Drysdale for ICAS

5 May 2016

New HMRC guidance on digital giving adheres strictly to the well-established principles of Gift Aid, explains Donald Drysdale.

Online shopping

The internet has changed the way we run our lives. Companies collect massive quantities of data about our online purchasing habits and use this to bombard us with personalised flows of advertisements. While this activity funds many of the free websites we take for granted, it can also cause a disturbing sensation that we’re always being watched.

Whatever you buy online, however personal, your activity is likely to trigger ads for similar products. As advertisers become ever more sophisticated, ads are also triggered by other signals such as products viewed, online content you’ve read and information about you harvested from social networks. The next logical step is to target the ads more specifically using your current location, income and so on.

Online fundraising

Forward-looking charities and professional fundraising organisations are now using similar techniques to draw the attention of the online community to the plight of those they are trying to help. Targeted ads are being directed towards those considered most likely to give, in ways thought most likely to persuade them to do so.

Social networks play a key role in this process. People naturally want to emulate their family, friends and wider contacts by supporting the same causes that they do. When people see that their social network is contributing to a particular cause – such as disaster relief — they are more likely to donate as well, and to do so digitally.

New HMRC guidance on Gift Aid

Not so long ago I commented on the changing circumstances of Gift Aid in an article entitled Gift Aid: Donors and charities beware and the points made in that article are still valid. In addition, HMRC has now published revised guidance on Gift Aid in the context of the many new and innovative ways of giving to charity through digital platforms including social media and fundraising websites.

Even when using social giving opportunities, you must only claim Gift Aid when donating your own money. You must also give the charity a valid Gift Aid declaration, declaring that you have paid or will pay UK income tax or capital gains tax covering the donation.

If you have a social giving account with a charity fundraiser or if you register a credit or debit card with a fundraising website, you might sometimes use this to transfer money given to you by others to charity. This could come from (say) family, friends or work colleagues, or it might be raised from fundraising activities such as jumble sales, raffles, tombolas or ticket sales. However, you can only claim Gift Aid on your own donations that are charged to your account, and for which you do not receive a compensating payment from others.

Some social giving accounts allow you to leave a supportive message for a fundraiser who is participating in a sponsored event, or a dedication message in remembrance of a loved one. Thankfully HMRC regards it as acceptable for others to be included in such a message, so long as the donation is still your own money.

If you donate to charity simply by sending a text message from your mobile phone, you can use Gift Aid – but only if you are donating your own money and you are the person who is legally responsible for paying the phone bill.

HMRC’s new guidance on digital giving and social giving accounts, with examples, is contained in section 3.44 of its Gift Aid guidance.

Article supplied by Taxing Words Ltd

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