Lots of people are unaware of the term ‘Gift Aid’, but behind the scenes it increases the value of donations made to charities, at no extra cost to the donor themselves, and plays an important role in raising extra income to help fund the services provided by Farleigh Hospice within our community.
So what is Gift Aid? In summary it is a system set up by the government to allow charities to claim back the tax which would have been paid on a donation, if the donor is a UK tax payer. This means that for every £1 given, the charity gets another 25 pence from Her Majesty’s Revenue & Customs (the old Inland Revenue), helping the donation to go even further.
“Let us say for instance that a ‘Mr Brown’ donates £10 to Farleigh Hospice; if he ‘Gift Aids’ it, Farleigh Hospice can claim back the tax that Mr Brown has paid on that £10 from HMRC. So, at no additional cost or hassle to Mr Brown, his £10 donation is now worth £12.50 to Farleigh Hospice. That, in a nutshell, is how it works” explains Jonathan Stokes, Retail Manager at Farleigh Hospice.
The system was originally set up to deal with monetary gifts made to charities, but over the last few years, with the support of HMRC, an increasing number of charities have adopted a method of also claiming Gift Aid on items which have been donated to them for selling. By simply asking the person who is giving the goods if they would like to Gift Aid their donation, subject to some basic regulations, the charity effectively becomes an agent, selling the goods on the donor’s behalf. The donor is still technically the owner of the goods at this point. Once the goods have been sold the charity then informs the donor who can in turn donate the money which has been raised from the sale of the goods. Gift Aid can then be claimed against that amount. “Suppose that instead of donating £10 to Farleigh Hospice, Mr Brown donates a mixture of books, bric-a-brac and clothing. We then sell them in our shops for a total value of £20 and Mr Brown agrees to Gift Aid the money raised by the sale. Farleigh Hospice then claims the basic rate of tax back from HMRC and the £20 is suddenly worth £25, at no extra cost to Mr Brown.”
Jonathan goes on to explain. “It’s not every day that the government offers to give back money from the tax system, but Gift Aid is one scheme which will do just that, and they encourage charities to take advantage of it. It’s a relatively easy method for our donors and for our shops to turn those donations into cash, and then get back from the government the tax that the donor has paid on that amount. For all our shops it’s a really exciting new income stream which will provide valuable extra funds to support the varied and valuable work of Farleigh Hospice.”
If you would like more information about Gift Aid and donating items for selling in Farleigh Hospice’s shops, please contact Jonathan Stokes on 01245 228944.