When someone makes a donation, you might want to give the donor something in return (an item or service) to say thank you. This is known as a ‘benefit’. Literature that tells donors what your charity does eg a newsletter, or a simple plaque to thank a donor, doesn’t count as a benefit.
The value of a benefit is always the value to the recipient, not the cost to your charity or CASC. For most benefits, the value is simply the retail value of the item or service.
If you can’t find out the retail value of an item or service, you must work out how much someone would be prepared to pay. You could, for example, look at the value of similar items or services. Where a benefit is attendance at an event that is not open to the public, the value of the benefit is the cost of the event divided by the number of guests.
You can claim Gift Aid on the donation if the value of the benefit doesn’t exceed certain limits, for example:
Donation Maximum value of benefit
Up to £100 25% of the donation
£101 – £1000 £25
£1,001 and over 5% of the donation (up to £2,500)
These rules still apply when the benefit is given to a family member or a company run by the donor.
The benefit rules apply to different types of donation, like charity auctions and charity events and may affect the amount you can claim.
You must keep a record of Gift Aid donations you receive and all benefits that were given to donors as a consequence of their donation.
If you want to discuss any of this further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk
Paula McIntosh Administrator
Torr Waterfield - Accountants & Business Advisors 