Churches often have one-off restricted collections for
- internal projects (eg boiler repairs, new hymn books)
- external causes (eg mission agencies)
Providing the cause or project is for a church-related (ecclesiastical) purpose, all tax-payers should be encouraged to use a Gift Aid envelope or G-code that identifies the specific restriction (eg writing "Roof" on the envelope, or using special coloured envelopes, or having clearly marked collecting boxes).
Collections for external charities
There are two different ways for churches to handle collections for other charities.
1 - Using the church’s own Gift Aid system
The PCC will need to create a separate restricted fund in the accounts. The church’s own one-off Gift Aid envelopes must be clearly marked with the other charity’s name (eg CMS, USPG). The church should calculate the amount of tax refund generated from the appeal, and add that to the amount sent to the charity. The Revenue advises that the Gift Aid tax refund on this collection does not belong to the parish, but to the other charity. The PCC may top-up the collection from its own funds, but this element cannot be Gift Aided, as the PCC is not a taxpayer.
2 - Using the other charity’s own Gift Aid envelopes
It is also possible to use the other charity’s own Gift Aid envelopes. Church members will need to fill in their full name and address (not just the G-code), as the full declaration will be needed by the other charity. As the envelopes are opened the amount of each donation needs to be clearly marked on each envelope, and then all the envelopes sent off to the charity with a cheque for the cash received. The other charity will then make the relevant Gift Aid reclaim itself. In this case the income should not form part of the PCC’s own income in the PCC accounts, although it can be referred to in the notes to the annual accounts as part of the parish’s charitable activities.
See HMRC Guidance Notes for more details.
Fundraising collections by supporters
If a supporter wants to raise funds from other people (eg friends and neighbours) for the PCC, they must make it clear that the church will be the beneficiary and that to be tax-effective each original donor must complete a Gift Aid declaration made out to the PCC (eg using a standard church one-off GA envelope). The supporter cannot sign one declaration, treating the money collected as their own income, as he/she is not personally making the donation out of their own taxed income.