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Streamlined Gift Aid for Re-use Charities

FRN is pleased to report that following negotiations with HMRC on the simplification of Gift Aid for product donations, the HMRC have today announced new rules for administering such claims. FRN has been working with the Charity Retail Association and others during 2012 to gain HMRC and the Treasury approval for these changes.

The new rules will lift the administration burden for charities claiming Gift Aid on the proceeds of donors’ goods sold by charity shops have been announced by HM Revenue and Customs (HMRC).

The new rules allow donors to make a one-off Gift Aid declaration that covers donations of up to £100, or £1,000 of future sale proceeds, in a tax year. The charity will need to write to the donor only when sale proceeds exceed the amount.

Current rules require a charity to write to a donor before the charity can claim Gift Aid on the proceeds from each sale, so that the donor can confirm that they are UK taxpayers.

Sajid Javid, Economic Secretary to the Treasury, said: “I’m delighted that we’ve been able to work with the charity sector to make Gift Aid simpler and less costly for charity shops. Gift Aid income from these shops is important for many charities, and we want to reduce the associated administrative costs as much as possible.”

Gift Aid is a tax relief on donations of money by individuals to charities. The donor must pay at least the same amount of income tax or capital gains tax as the charity reclaims from HMRC on the donation. Initially in 2006 the charity sector devised a way for Gift Aid to be applied to the sale proceeds of goods sold by charities on behalf of their supporters. Instead of giving the goods to the shops for the shop to sell, the shop sells the goods on behalf of the supporter. The shop must then offer the supporter the choice of taking the money, less a sales commission, or giving the money to the charity under Gift Aid.


The new processes, which are optional for shops and donors, allow donors to authorise the gift of up to £100 of sale proceeds (for goods sold by a charity operating the shop directly) or £1,000 of sales proceeds (for goods sold by a trading subsidiary of the charity) without the shop needing to seek the supporter’s permission to claim the tax relief. The new procedures will apply from April 2013.


The FRN welcomes these changes and congratulates the team at HMRC and other charities for all their hard work to bring about a simpler process for re-use charities to administer.

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