Gift aid relief on one off donations

One off donations do qualify for tax relief, providing that the guidelines set out for gift aid relief are followed.  For the charity to claim tax relief under gift aid, you must provide personal details including your name and address and confirm that you are a taxpayer.  This entitles the charity to treat your donation as being made net of basic rate tax and the charity then reclaims the calculated amount of basic rate tax. In addition, if the donor is a higher rate taxpayer, they can claim higher rate tax relief on the amount donated.

The payment for an item at a charity auction is not officially a gift to charity, but HM Revenue & Customs do recognise that people may intentionally pay more than an item is worth, in order to support the charity.  The Revenue will therefore treat such payments as donations qualifying for tax relief under the gift aid scheme, providing that the other rules of the scheme are met and the benefits don't exceed certain limits.

To calculate how much can be considered as a qualifying donation for gift aid relief, you need to consider if the item is commercially available. Where you can buy the item, the amount over and above the retail price is considered to qualify for gift aid.  When it is not available, for example an item that is signed by a particular celebrity, the value of the item auctioned is the price paid by the successful bidder. A bidder is likely to be prepared to pay more for such an item because it is unique.

Where an individual purchases a number of different items at charitable auctions, each item must be considered separately as the treatment could differ for each item purchased.  It is therefore advisable to seek professional advice in order that the correct relief is claimed.
 

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.