HMRC publishes new guidelines on charity shops' gift aid

13 May 2013 News

The HMRC has released guidelines outlining the new gift aid claiming process for charity shops.

The HMRC has released guidelines outlining the new gift aid claiming process for charity shops.

HMRC says the new system will simplify claims and has published 3.51 Claiming Gift Aid when goods are sold by, and the proceeds gifted to, charities to aid the process.

The rules were announced in December and became active at the beginning of last month. One feature is that those who donate items to charity shops can make one-off gift aid declarations, negating the need for the charity to write to donors once the items have been sold before being able to claim the relief.

An organisation which runs its shops via a trading subsidiary can accept one declaration for the sale of items costing up to £1,000 per annum. Shops not run this way can instead receive the same for goods to the value of £100 from an individual donor.

The new guidance covers how gift aid operates across a broad range of scenarios. It includes details of when donors need to sign an agency agreement; the effect when a charity engages commercial operators to sell certain goods on behalf of an individual donating the proceeds to the charity; tax implications for donors; and record-keeping for gift aid.

HMRC has also included template letters that shops can use to write to people regarding gift aid on their donated items.

The Charity Retail Association’s head of policy and public affairs Wendy Mitchell said that the Association is “delighted” that the official guidelines have been published.

“Our members can now get on and implement the changes,” Mitchell said. “For many charities, this change will significantly reduce the cost and bureaucracy of unnecessary letter-writing to donors and is a welcome development.

To help with the transition, the Association is providing an information pack for its members which answers frequently asked questions and provides some example agency agreements.

“We would like to thank HMRC for working with the Charity Retail Association and its members to arrive at this positive result for charity shops and we will work with them, if necessary, on refining the published guidance in the coming months,” Mitchell added.

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