TAX RELIEF FOR DONATING YOUR OLD SUIT TO CHARITY!


HMRC has amended its guidance for charities that claim Gift Aid on the sale of donated goods.Gift Aid normally only applies to gifts of money by an individual. However, in certain situations, Gift Aid can be claimed by charities or community amateur sports clubs on the income from the sale of supporters’ goods on their behalf.

The charity can offer to act as an agent for private individuals and sell goods on their behalf, so that at the point of sale the funds actually belong to the individual. If the owner agrees to donate the sales proceeds to the charity, Gift Aid can be claimed by the charity on the net sales proceeds, subject to all other Gift Aid conditions being satisfied. The charity is then able to reclaim tax at the basic rate. A number of charities, such as Oxfam, operate such schemes. The charity provides the donor with details of the value of goods sold in order for the donor to claim tax relief on their self-assessment tax return.

Remember that the Gift Aid payments, grossed up for basic rate tax, are an effective way of reducing income where an individual’s personal allowance is restricted by income in excess of £100,000 a year.
Higher rate taxpayers also benefit from additional tax relief. For example, if a suit is sold for £40, the charity is able to reclaim £10 basic rate tax from HMRC (£50 gross) and a higher rate taxpayer obtains a further £10 tax relief – win win!

Advertisements

Leave a comment

Filed under Accountancy & Tax Stuff, Business advice

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s