An insight into changes in Gift Aid

04 December 2017

In our Budget blog we referred to the review of the Gift Aid donor benefit rules and the changes that will come into effect from April 2019.

In the majority of cases, of course, Gift Aid is quite straightforward – the individual concerned makes a donation (and an appropriate declaration), he receives nothing in return other than a thank you, and the charity is able to reclaim from HMRC 20/80ths of the amount received. Where the charity provides the donor (or a connected person) with a benefit, however, there are rules to ensure that this remains modest relative to the sum donated. There are currently three thresholds. For donations:

  1. up to £100, the donation is still eligible for Gift Aid provided that the value of the benefit equates to no more than 25% of the donation;
  2. between £100 and £1,000, the value of the benefit is capped at £25; and
  3. over £1,000 the value of the benefit can equate to up to 5% of the donation.

There is an overall limit of £2,500 per donor per tax year.

From April 2019 the limits will work in a slightly different way, effectively amalgamating thresholds (2) and (3) such that:

  1. the limit for the first £100 of any donation will be set at 25%; and
  2. for larger donations charities will be able to offer an additional benefit of up to 5% of the excess over £100, again with a maximum of £2,500.

The issue of what is ‘a benefit’ and, more particularly, how should that benefit be valued, remains complex and advice should always be taken if you are unsure. If you would like to discuss any of these changes and how they might affect you, please contact me or your local UHY charity adviser.