Gift Aid donation claims for charities and CASCs
Find out about the types of fundraising donations that charities and community amateur sports clubs (CASCs) can and cannot claim Gift Aid on.
Introduction
You can claim Gift Aid on donations of money made by an individual UK Income Tax and/or Capital Gains Tax payer. It’s an easy way to help your charity or community amateur sports club (CASC) maximise the value of donations.
To claim Gift Aid, HMRC must recognise you as a charity or CASC. You’ll need to ask donors to make a Gift Aid declaration.
In certain circumstances, you can treat non-gift payments made to charities as donations for Gift Aid purposes. For example, membership subscription paid to a charity.
If any donor or person connected to the donor benefits significantly from their donation, it does not qualify for Gift Aid.
Find more about Gift Aid donations in HMRC’s detailed guidance notes.
The benefit rule
When someone makes a donation, you might want to give the donor something in return (an item or service) to say thank you. This is known as a ‘benefit’. Literature that tells donors what your charity does, such as a newsletter or a simple plaque to thank a donor, does not count as benefits.
The value of a benefit is always the value to the recipient, not the cost to your charity or CASC. For most benefits, the value is the retail value of the item or service.
If you cannot find out the retail value of an item or service, you must work out how much someone would pay. For example, you could look at the value of similar items or services. Where a benefit is attendance at an event that is not open to the public, the value of the benefit is the cost of the event divided by the number of guests.
You can claim Gift Aid on the donation if the value of the benefit does not exceed certain limits, for example:
| Donation | Maximum value of benefit |
|---|---|
| up to £100 | 25% of the donation |
| £101 + | 25% of £100 plus 5% of £101 up to the total benefit value of £2,500 |
These rules still apply when a family member or a company run by the donor receives the benefit.
The benefit rules apply to different types of donation, such as charity auctions and charity events. They may affect the amount you can claim.
You must keep a record of Gift Aid donations you receive and all benefits given to donors as a consequence of their donation.
When you cannot claim Gift Aid
You cannot claim Gift Aid on:
- payments for goods and services
- donations of money from a company
- gifts made on behalf of other people, for example, a membership subscription paid on behalf of somebody else
- gifts that come with a condition about repayment
- gifts that come with a condition that the charity buys goods or services from the donor
- payments received in return for goods or services for example admission to a concert or a fee for a sponsored challenge
- a ‘minimum donation’ where there is no choice about payment
- gifts made using ‘charity vouchers’ or ‘charity cheques’
- donations received before the date that HMRC accepts your organisation as a CASC or a charity for tax purposes
Sponsored challenges
If your charity organises fundraising events such as marathons or treks abroad, you may be able to claim Gift Aid on sponsorship that participants raise.
All sponsorship payments are eligible for Gift Aid if participants pay the cost of flights and accommodation themselves.
Example:
A donor signs up for a sponsored bike ride in Vietnam which costs £1,500 for flights and support costs. The charity asks the donor to raise £2,500, of which £1,000 goes to the charity.
Where sponsorship payments are eligible for Gift Aid, sponsors must make a valid Gift Aid declaration.
The deposit or registration fee that participants pay in advance of a sponsored challenge is not eligible for Gift Aid.
If a sponsor is connected to the participant, their donations only qualify for Gift Aid if the participant pays the full cost of the trip. This ensures that all the sponsorship money raised goes to the charity.
A ‘connected person’ is:
- a wife, husband or civil partner
- a brother, sister, parent or grandchild
- the wife, husband or civil partner of a relative
- a company under the control of the donor, or under control of connected persons
HMRC recognises that a charity or CASC are not expected to check whether a participant and their sponsors are connected. However, you should take reasonable steps to ensure that Gift Aid payments are not received from people or companies connected to a participant. You can do this by including an explanation in any event literature and on the sponsorship form.
Charity membership fees
To qualify for Gift Aid, charity subscription payments must be for membership only. They must not give members personal use of the charity’s facilities or services.
These conditions still allow members to:
- receive newsletters you produce to explain your charity’s work
- visit and view the work of your charity
- take part in activities that form part of your charity’s objectives
CASCs cannot claim Gift Aid on membership payments because members have personal access to the club’s facilities or services.
Charity and CASC membership fees do not qualify for the Gift Aid Small Donations Scheme (GASDS).
You cannot claim Gift Aid on a subscription payment paid on behalf of someone else. This is because it’s considered a gift to the person whose membership you pay, not to the charity.
However, if you pay for the membership of a charity for a child (under the age of 18), this can be accepted as a gift. But again, this is on the condition that payment is for membership only, and does not give children personal use of the charity’s facilities or services.
Professional organisation membership fees
You can treat membership subscriptions paid to some organisations on HMRC’s list of professional bodies as an expense deduction. Working members can claim tax relief on their subscription, but you cannot treat subscriptions as Gift Aid payments.
You can treat retired or student members’ subscription fees as a Gift Aid payment. They must confirm that they do not have income from which they can deduct professional membership subscriptions.
Church collections
You cannot claim Gift Aid on donations collected in your church that are for another charity. This is because the money collected is not part of the church’s income.
If a church chooses to set up a fund to raise money for a charity, then the money collected forms part of the church’s income. In this case, the church (which is a charity in its own right) must claim any Gift Aid due.
Selling donated goods on behalf of individuals
This process is exclusive to charity shops that operate a retail Gift Aid scheme to sell goods on behalf of donors. To maximise the amount raised, charities can sell valuable or collectable items donated to a shop. This can be at a commercial public auction or an online auction website.
Money raised by selling donated goods like clothes does not qualify for Gift Aid. You need to explain to owners of donated items that the shop, auction or website will act as their ‘agent’ to sell goods on their behalf if the owner will give the sale proceeds (minus any commission charged) to the charity as Gift Aid donation.
If you operate a charity shop, staff and volunteers must explain the arrangements before donors complete a form appointing you as their agent.
The owner has the right to keep all the proceeds from the sale of their goods. They can choose to donate all or part of the amount. You can claim Gift Aid on the agreed amount after any commission (including VAT) has been deducted.
The owners of donated goods will usually make a Gift Aid declaration when they ‘sign up’ for the scheme, before you sell their goods.
Operating Retail Gift Aid
There are 3 ways of operating ‘Retail Gift Aid’:
If a charity operates shops directly, then the charity can use the Standard Method or Method A. Charity shops run by a trading subsidiary company of a charity can use Method B. Shops operated by a separate entity such as a company can use any method.
The Standard Method allows an individual to take goods to a charity shop and agree that the shop will act as their agent in selling the goods. The shop will deduct a commission. The individual must fill in a Gift Aid declaration at this stage, if the charity does not already hold one from the individual. The charity marks the goods in some way so that the sales proceeds can be linked back to the donor.
After the goods are sold (but before the charity makes a Gift Aid claim) the charity shop writes to the owner of the goods to advise them of the net sale proceeds. HMRC provides template letters for the Standard Method, Method A and Method B for you to download, print and use.
Other template letters are available for:
- Method A for where the £100 limit has been exceeded
- Method A where subsequent sales are made after the £100 limit has been exceeded
- Method B for sales above the £1,000 limit
The charity shop must give the individual at least 21 days to respond to this letter before it treats the net sale proceeds as a donation to the charity.
HMRC’s detailed guidance on Retail Gift Aid explains how each method works in more detail. If you want to claim Gift Aid in this way, you must read the guidance to make sure you meet the conditions of the scheme.
Keeping records
You must keep all documentation related to claims on the proceeds from the sale of goods on behalf of individuals, including:
- the donor’s dated Gift Aid declaration
- a copy of any written agreement with the donor that shows the charity or its subsidiary can sell goods on their behalf
- documentation to show that the individual has been notified of sale proceeds where required
- accounting records to prove that items belong to an individual
- if the goods are sold by a trading subsidiary, records to show how the sales proceeds are sent to you
Charities should maintain records of staff and volunteer training and guidance. This proves that they’re implementing the process correctly.
Charity events
If you sell tickets to an event you have organised, such as a concert or fundraising dinner, payment does not qualify for Gift Aid. Even if the ticket price is higher than the cost of the event, the money made from ticket sales counts as profit and not a donation.
To qualify for Gift Aid, a payment must be a voluntary donation and not be a compulsory payment for attending an event.
Minimum donation payments do not qualify for Gift Aid. But if someone chooses to pay more than the minimum donation, the extra amount paid qualifies for Gift Aid.
If you set a ticket price for an event and also ask for a suggested donation, the donation is eligible. You must make it clear to people buying a ticket that they can attend without making a donation. You must not give preference to those who do give a donation.
All donations qualify for Gift Aid at a ‘donation only’ event. At these events, people can attend whatever they decide to give, even if they make no donation.
Viewing charity property
Entry fees to visit and view your charity property do not qualify for Gift Aid because they are not a gift. But a voluntary donation that allows visitors to view your property may qualify for Gift Aid.
Donations qualify when they:
- are 10% or more than the normal admission fee, or
- allow admission for at least 12 months
You must offer visitors a choice to pay the normal entry fee only or the admission price plus a donation at the time of entry.
Information you must provide to visitors
Visitors must receive the same right of admission whether or not they pay a donation.
You’ll need to clearly advertise the normal entry fee and make it clear to all visitors that they will be allowed entry when they pay the normal admission charge if they choose not to make an additional 10% voluntary donation.
You can explain the choice to pay the standard entry fee or the 10% or more donation amount on your admission signage and website. Staff or volunteers should explain these options at the time of asking for payment.
If you do not give visitors a clear choice to pay the standard entry fee or make a donation of 10% or more, then any payment that exceeds the standard entry fee by 10% or more is not a freely-given gift. In this case, payment would not be eligible for Gift Aid.
When visitors pay
When a visitor voluntarily agrees to pay a donation of 10% or more, you must ask the donor:
- is the donation for entry by members of the donor’s family only
- for a written or verbal Gift Aid declaration
If the visitor gives you a verbal declaration, you must give them written confirmation and keep a record for yourself. This is usually included as part of the payment receipt issued with entry tickets, eg on the till receipt.
For visitors who choose admission for at least 12 months, you have 2 options:
- accept a donation and allow free admission for all visits during the period (minus up to five days a year when free entry does not apply)
- accept a donation and grant a right of admission on payment of a reduced fee, which must apply to all visits during the period (only the initial donation qualifies)
Terms and conditions
A voluntary donation that allows visitors to view your property will not qualify for Gift Aid if the terms and conditions attached to an admission fee include a right to a full or partial refund of the payment. For example, in the event of bad weather, cancellation of an exhibition or mechanical failure of an exhibit.
This is because under the Gift Aid scheme a donation cannot be repaid under any circumstances.
Expenses paid to volunteers
If the expenses are reasonable, you can reimburse a volunteer for costs they have had to pay because of their work, eg, train fares.
Once you pay a volunteer, they can keep the money or pay part or all of it back to the charity as a Gift Aid payment.
Gift Aid only applies when the volunteer makes an actual payment of money to your charity or CASC. You cannot claim Gift Aid if a volunteer decides not to claim for expenses that they’re entitled to.
If you pay expenses to a volunteer which are higher than the costs incurred, the payment may be taxable as employment income if it can be shown that they’re employed. If this cannot be proven, the payments may be chargeable as a miscellaneous receipt.
Charity auctions
When the retail value of an item bought in a charity auction exceeds the benefit limits, you cannot claim Gift Aid.
It is possible for the donor’s payment to be split between an amount to ‘buy’ the item and an amount that can be treated as a gift. To do this the value of the item auctioned is subtracted from the amount paid. The remainder is treated as a donation that can qualify for Gift Aid. You must make the value of the item clear to bidders at the auction before each item is sold.
For an item that’s not commercially available, supporters at a charity auction may pay more than its retail price to increase their donation or because the item is unique. The commercial value of a football shirt, for example, is increased if it’s signed by the football team. The benefit for Gift Aid purposes is the amount it fetches in the auction.
The benefit is calculated as follows:
| Donation | Maximum value of benefit |
|---|---|
| up to £100 | 25% of the donation |
| £101 + | 25% of £100 plus 5% of £101 up to the total benefit value of £2,500 |
When the donation exceeds the benefit limits
When the value of the benefit exceeds the limits in the donor benefit rules, the donor can ‘buy the benefit’.
For the donor to ‘buy the benefit’, and enable you to claim Gift Aid, you must make them aware of the retail cost of the item (the value of the benefit) and that they can buy the item elsewhere when they make their successful bid (donation).
This ‘excess donation’ qualifies for Gift Aid.
In some cases, supporters can bid on services that donors promise to carry out for successful bidders, like a massage or childcare. To be eligible, the amount that the successful bidder pays for the ‘promise’ is the same as the value of the benefit. If a ‘promise’ is commercially available, the value of the benefit is the same as its retail price.
Donations to schools, charities involved in running schools and Educational Trusts
Only voluntary gifts or payments are eligible for Gift Aid. Simply describing a payment as ‘voluntary’ or a ‘donation’ does not make it eligible for Gift Aid.
If access to educational services or facilities provided by a school requires parents or relatives of students to make a payment, payments are not ‘voluntary’ and therefore they are not charitable donations.
If parents or relatives are asked to make ‘voluntary contribution’ payments to a school or school charity, which are linked to the provision of services or facilities to related pupils, they are not charitable donations. Payments made for the following are not eligible for Gift Aid:
-
tuition fees
-
school holidays
-
extra-curricular activities
-
lessons
-
educational trips
-
tickets for a school production
This is because these payments are not voluntary gifts, and a student receives a benefit paid for by a relative.
Donations made to an appeal or for a specific charitable purpose of the school, may be eligible for Gift Aid. Donations must not be linked to the provision of any benefit to a student related to a donor. Donations given for the following will usually qualify for Gift Aid:
-
non-uniform days
-
sponsored events
-
building appeals
-
equipment appeals
Educational school trips
Head teachers may not charge parents for any school trip that is part of the national curriculum. However, the head teacher may ask for a voluntary contribution towards a trip. You must not discriminate against the children of parents who do not contribute.
Voluntary contributions are eligible if:
- they’re non refundable even if the trip does not go ahead or if their child does not go on the trip
- any benefit (for example, travel costs, trip insurance, cost of entry) does not exceed maximum levels of allowable benefit for the donation
- the school tells parents that the contribution is not compulsory
Example 1:
| Voluntary contribution requested by school | Voluntary contribution actually made | Amount eligible for Gift Aid |
|---|---|---|
| £10 | £15 | £5 |
Example 2:
| Cost of trip to a museum | Voluntary contribution requested by school | Amount eligible for Gift Aid |
|---|---|---|
| £8 (transport £5, entry £2 and brochure £1) | £10 | £0 |
In this case, the amount does not qualify for Gift Aid because the benefit of £8 (80%) exceeds the 25% limit on benefits because:
| Donation | Maximum value of benefit |
|---|---|
| up to £100 | 25% of the donation |
| £101 + | 25% of £100 plus 5% of £101 up to the total benefit value of £2,500 |
Updates to this page
Last updated 22 October 2019 + show all updates
-
Information about charity membership fees for a child under the age of 18 has been updated.
-
The tables under sections titled The Benefit Rule, Charity Auctions and Educational School trips have been updated.
-
Amendment made to the guidance on the retail Gift Aid process operated by charity shops.
-
First published.