Gift Aid and
If you have visited any of the UK’s stately homes, museums or other attractions of organisations such as the National Trust or English Heritage you may well have come across different categories of ticket price for admission, with the gift aid price often higher than the normal admission price.
Most people will be aware that by offering to allow a charity to treat their payment as a gift aid donation, the charity is able to claim 25% of the donation back from the government. With that in mind, the question in most people’s mind will be why a higher price is required for admission to be treated as a gift aid donation to a registered charity.
Gift aid on normal charity donations is reasonably straight forward in that the individual declares to the charity that they are a tax payer, and that they pay sufficient tax to cover any gift aid claim, and the charity can then reclaim 25% from the government on the whole donation. The cost to the tax payer is only their original donation, with additional tax relief if they are a higher or additional rate tax payer.
There are slightly more complicated rules concerning admission prices and gift aid. An admission price in itself is not considered a charitable donation, but by including a donation on top of the admission price then the whole amount can qualify for a gift aid claim subject to certain conditions.
In order to qualify the additional amount paid must be 10% or more of the normal admission price but it is important that visitors are offered a choice to pay the normal entry fee or the admission price plus a donation. In addition there cannot be a right to any refund attached to the admission fee, for example in case of bad weather or cancellation of an exhibit.
An extra £1 paid under the gift aid scheme on top of a standard admission price of say £10 can be worth over £3 to the charity, as the following illustrates:
|Amount paid by visitor||Tax refund from Government||Total received by Charity|
|Gift Aid admission||£11.00||£2.75||£13.75|
For higher rate and additional rate tax payers the net cost should be less after accounting for tax relief. In the example above the tax relief for a 40% tax payer would be a further 25% of the gift aid admission price, or £2.75, giving a net entry fee of £8.25. This represents a net saving £1.75 or 17.5% compared to the standard admission price.
If you would like further information on the above, or assistance in making a gift aid claim on your tax return please contact our Tax Director, Jenny Marks, for more information.
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