HM Revenue & Customs publishes guidance for charities on retail Gift Aid rules

The changes will reduce the cost and bureaucracy of unnecessary letter-writing to donors, according to the Charity Retail Association

HM Revenue & Customs
HM Revenue & Customs

HM Revenue & Customs has published guidance for charities that want to take advantage of new rules on retail Gift Aid. 

The rules, which were announced in December, came into force at the start of April. They allow people who donate goods to charity shops to make one-off Gift Aid declarations so that the charities involved do not have to write to them after items are sold before the relief can be claimed. 

The rules mean a charity that operates shops through a trading subsidiary can accept a single declaration for the sale of items worth up to £1,000 a year, whereas the smaller number of charities that operate shops directly can accept a single declaration for the sale of items worth up to £100 a year.

The Charity Retail Association last month warned that many of its members had not yet implemented the rules because HMRC had not published sufficient guidance on them.

The new guidance runs through the ways in which charity shops can operate the Gift Aid process, and gives hypothetical examples of how each one would work in practice.

It also includes links to template letters that charity shops can use when writing to people who have donated items to the shop regarding Gift Aid.

"If a charity is already claiming Gift Aid on sales made through charity shops and wishes to adopt a simplified process, it can do so at any time," the guidance says. "The £100 or £1,000 limit will then apply to the remaining part of the tax year. Only goods sold after the simplified process is implemented fall within the new arrangements."

It says the charity must think about how it will move donors from one process to another. "For individuals who already have a Gift Aid declaration with the charity, the charity can either wait for them to visit a shop again and at that point ask them if they will sign up to the revised process, or the charity can write to each one of them and explain that the process has changed," it says.

Wendy Mitchell, head of policy and public affairs at the CRA, said the guidance meant members could now implement the changes.

"For many charities, this change will significantly reduce the cost and bureaucracy of unnecessary letter-writing to donors and is a welcome development," she said.

Mitchell said that the guidance seemed to reflect conversations the CRA had had with HMRC, but there could be some suggestions for changes to the guidance once members had had a chance to read it.

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