Share

New charity shop gift aid rules will cut red tape

New charity shop gift aid rules will cut red tape
News

New charity shop gift aid rules will cut red tape2

Finance | Tania Mason | 20 Dec 2012

HMRC is to introduce new rules that will dramatically reduce the numbers of letters that charities must send to donors in order to claim gift aid on their donations to charity shops.

From next April, in each tax year, donors will be able to make a single gift aid declaration that covers sale proceeds from donations of up to £100 if the charity operates the shop directly, or £1,000 if the goods are sold by a trading subsidiary.  Donors will only need to be contacted by the charity again if income from the sale of their donated goods exceeds those amounts.

At the moment, charities must write to each donor to confirm their gift aid eligibility, every time a donated item is sold.

Charity Tax Group welcomed the announcement, saying the reduction in administration could save large charities something like £250,000 a year.

The announcement came about as a result of work carried out by an HMRC working group comprising representatives from the charity retail sector, charity tax bodies and the government.  CTG vice chairman Richard Bray said discussions were “productive and constructive” and there was “significant agreement between charities and officials”.

CTG wrote to the Economic Secretary to the Treasury earlier this month, requesting that he approve the proposal, and Bray said CTG appreciated his prompt and favourable response.

He said the move will “dramatically reduce” the number of notification letters charities will need to write to donors.

CFG chief executive Caron Bradshaw said it was “a really good step in the right direction” and added: “We hope that this consultative approach could work as a potential model for streamlining and modernising the wider gift aid system.”

Warren Alexander, chief executive of the Charity Retail Association, also welcomed the move, saying he was delighted that the governement has moved so quickly. 

"We will be working with HMRC and our members on the final details, and on ensuring that charities understand what they need to do to take advantage of the new processes and comply with HMRC requirements," he added. 

HMRC will publish detailed guidance on the new procedures in the new year.

Barry Gower
Director
GAIN Gift Aid Consultants
4 Jan 2013

I would like to think that if a donor gave an amount, regardless of whether it was as a result of the sale of goods in a charity shop, or any other method, that the charity would acknowledged this and thank them. Although the details are not finalised, the charity would need to keep records of this type of donation , if only to ensure that the amount did not exceed the maximum (£100 or £1000). Then, at the end of that tax year, the charity writes to the donor, thanks them and advises of the cumulative amount that has been donated in that tax year, and encourages the donor to include this amount on their tax return.

Note that they do not have to tell the charity anything regarding their tax status, and they do not even have to know whether or not they are higher rate tax payers. The tax system will work this out and if it turns out that they fall into this bracket, they will automatically get this as tax relief!

Valerie Morton
20 Dec 2012

So, how will this affect higher rate tax payers who curently claim higher rate tax relief on the value of sales from their donated goods? If they are not informed of the exact amount of their sales they will not be able to claim the relief. If they have to tell charities they are HRT payers it may act as a disincentive.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

VSO's income increased by £11.6m in 2013/14

30 Jul 2014

Voluntary Services Overseas saw its income increase by 20 per cent to £68.7m in 2013/14, according to...

Syria and Haiyan appeals boost Oxfam income by 6 per cent

30 Jul 2014

Oxfam’s total income rose by more than £21m to £389m in the year to March 2014, according to its annual...

Man admits stealing £300,000 from collections for Help for Heroes

29 Jul 2014

A man has admitted pocketing £300,000 donated by members of the public who believed it would go to Help...

Commission investigates charity over concerns it was used for private benefit

29 Jul 2014

The Charity Commission has opened a statutory inquiry into grant-giver the Catalyst Trust over concerns...

PTA-UK: Big Society Network chief was confident of funding

28 Jul 2014

PTA-UK has revealed that it turned down an invitation from Big Society Network to be a partner in its...

Big Society Network chair’s company gave £64k to Conservative Party

28 Jul 2014

A company owned by the chair of Big Society Network donated services totalling more than £54,000 to the...

Online donations forms are too long and cost charities donations, finds report

28 Jul 2014

One third of leading charity websites require potential donors to complete more than 20 actions before...

Greenpeace video removed from YouTube following copyright claim

14 Jul 2014

A campaign video by Greenpeace against Lego’s relationship with Shell has been subject to a copyright...

Oxfam advert removed after appearing before extremist videos

10 Jul 2014

Oxfam has removed one of its adverts from YouTube after it was shown on channels showing content from...

Join the discussion

Twitter button

@CSFundraising