Charities and Not for Profit
Retail Gift Aid
Charities or Community Amateur Sports Clubs (CASC) often raise money by selling second hand clothes or goods. Donation of goods does not qualify for Gift Aid which only relates to money.
However a charity can act as an agent for their donors and sell items on their behalf in the hope that the donor will donate the proceeds and this donation can be Gift Aided provided the donor is a UK tax payer.
The basic rules
- The goods remain the owners until they are sold and the charity act as agent in the sale.
- The owner must have the right to retain the proceeds of sale but can choose to donate all or part of them.
- The charity or CASC must contact the potential donor after the items are sold and offer to pay over the proceeds of sale of the goods.
- The donor must make a Gift Aid declaration for any donations made; often this declaration is made at the time of donating the goods.
Keeping proper records
- The agreement with the individual donor.
- Confirmation that the donor has been offered the right to retain the proceeds of sale.
- Procedures are in place to identify the goods belonging to that individual donor.
HMRC recommend that the charity or trading subsidiary explains the arrangement in writing to donors at the outset and that proper records are kept to show:
It is a complicated process and your charity may find it helpful to take professional advice or help from HMRC before you commence. There is useful guidance on the HMRC website.