Taxpaying supporters often donate goods to churches to be sold at say a summer fete for the benefit of the church. Such gifts are goods in kind, and as such cannot be given under Gift Aid, which only applies to monetary gifts.
To be more tax-effective, HMRC advises that the donor must first ask the church as agent to sell the goods on their behalf. Then they can make a voluntary donation of all (or some of) the money raised under Gift Aid.
The simplest way to organise this is generally to
- Taxpaying supporter offers goods, and asks church to sell them on their behalf
- The donor is asked to complete a special donation form (covering “all my future gifts to St Wilberts PCC”) when they bring the goods in for sale. The form should ask the church to sell the goods, and say that the proceeds may then be donated as a voluntary gift under Gift Aid.
- The items to be sold must be clearly stickered and coded so they can be tracked to the eventual sales values. The amounts paid for the items must be recorded at the point of sale.
- The church must then tell the donor how much their gifts have raised, and ask if they still want to make a voluntary donation.
- If the answer is still yes (or no reply has been received within 21 days), a normal Gift Aid claim can be made.
In the case of second-hand goods, the maximum value on which Gift Aid can be reclaimed is the final sales value.
See HMRC Guidance Notes for more details.
A typical donation form and item sticker can be downloaded here. For audit purposes the sales tags can be stapled to the donation form and filed in the Gift Aid records.
Because many donated goods for resale are of relatively low value, it may be sensible only to undertake the extra administration and paperwork for items of significant value (say more than £5 or £10) – it will depend on the local circumstances as you assess the trade-off between the time and effort dealing with the forms, stickers, sales records etc, and the likely value of extra tax refunds generated.