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Making the most of gift aid and saving tax

Are you aware that if you are a UK tax payer you can claim gift aid on donations of goods, as well as cash, to charities? 

Christina Nawrocki of Wellers Accountants summarises how to get the most from donations of goods.

Typically donations of goods for sale do not qualify for Gift Aid. Gift Aid applies only to gifts of money. However, a charity or CASC can instead offer to act as an ‘agent’ and sell goods on their supporters’ behalf. If the supporter then agrees to donate the sale proceeds it could then qualify for Gift Aid. This type of arrangement is called 'Retail Gift Aid'.

Under the guidance:

  • The goods remain the property of the owner until they are sold. It must be clear that it is the owner who is selling the goods and not the charity – the charity is simply acting as an agent on the individuals behalf.
  • The owner must have the right to keep all of the net proceeds of the sale but can choose to donate all or part of the proceeds if they wish.
  • The charity may need to contact the donor after the goods are sold and offer to pay them the proceeds from the sale of their goods.
  • The donor must make a Gift Aid declaration for any donations made.

New rules were introduced in April of this year to make the system easier. Donors are now allowed to make a single gift aid declaration for the relevant tax year that covers sale proceeds from donations of up to £100 if the charity operates the shop directly, or £1,000 if the goods are sold by through the charity operating as a trading subsidiary (most high street charity shops). Previously, charities had to write to the donor after every sale asking if Gift Aid could be claimed. 

Christina Nawrocki says “This is great news for charities as they will benefit even more from each donation with less administrative burden. We are very happy to offer guidance to any charities or individuals looking for clarification in this area.”

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