HMRC changes rules on Gift Aid declarations for goods donated to charity shops

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HMRC changes rules on Gift Aid declarations for goods donated to charity shops

HM Revenue & Customs has announced new rules that will allow people donating goods to charity shops to make a one-off Gift Aid declaration covering sales of items worth up to £1,000 a year.

Under the current system, charities have to write to the person who donated an item after it is sold so the donor can confirm they are a UK taxpayer before Gift Aid can be claimed. They must offer the donor the choice of taking the money, minus a sales commission, or giving the money to the charity under Gift Aid.

HMRC announced that, from April, donors will be able to sign a one-off Gift Aid declaration that covers donations for the relevant tax year up to a fixed level of sale proceeds. The amount is £1,000 for charities that run their shops as trading subsidiaries – the majority of charities that run shops – and £100 for charities that operate their shops directly.

The Charity Retail Association estimated that the changes would save UK charities millions of pounds in administration costs.

Warren Alexander, chief executive of the association, said: “This new process will significantly reduce administration and unnecessary correspondence for many of our members, reducing cost and cutting red tape for UK charities. We will now 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.”

Paul Farmer, chief executive of the mental health charity Mind, which has 126 UK shops, said the changes would save the charity tens of thousands of pounds.

“This is really good news,” he said. “We know that the Gift Aid system put in place by HMRC has been very bureaucratic and burdensome for those of us that run charity shops. Ninety-nine per cent of people who have signed up to Gift Aid have said that it is fine to Gift-Aid that amount when contacted. This should reduce bureaucracy for charity shops and HMRC.”

Farmer said feedback from donors suggested they did not understand why the charity was writing to them about Gift Aid when they had already filled in a form in the shop.

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.”

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