Independent schools discounts on summer term fees: a gift aid opportunity

With schools being closed to all but the children of key workers due to coronavirus and trying to provide online rather than face to face education, many are offering a discount on summer term fees. There is an opportunity to ask parents to consider donating the discount to the school, either to a specific current appeal or to a bursary fund.

Many parents are already asking about this, but is it possible to claim gift aid on these donations?

The scope for claiming gift aid will depend on whether the parents have already paid the summer term fees before the discount is offered. This is because there must be a donation in the form of a money payment in order to qualify for gift aid, and this test is applied at the time the payment is made.

If parents have already paid, then the school owes them a refund. However, journaling this over to the bursary fund is not a qualifying donation for gift aid purposes. HMRC have previously confirmed this in the context of parents donating deposit refunds when pupils leave.

Gift aid is only possible in this situation if the school makes a refund to the parent and the parent then makes a separate donation to the bursary fund. There must be two separate payments to comply with the gift aid rules and to maintain an acceptable audit trail for HMRC; a set off or simply returning the refund cheque does not work. This is, of course, an administrative burden and some parents may simply decide not to donate.

If parents have not already paid and choose to donate the discount, or another sum (they must confirm they are doing this and be free to choose the amount), rather than simply paying the discounted summer term fee then gift aid may be possible. The school will need to get parents to give them a gift aid declaration to enable them to claim the repayment from HMRC.

The school will also need to have an HMRC gift aid repayment reference and online gift aid account. If you do not have one, then an online application will need to be made to HMRC to set one up. This is done via the school’s Government Gateway account.

None of this will stop parents donating the discount to the bursary fund, it simply affects the ability to claim gift aid on top. 

For more information, please contact Graham Batty or Nick Sladden


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