Tickets for social events
It is not generally possible to claim Gift Aid refunds on tickets for social events (parish fetes, meals, concerts etc). HMRC does not allow claims under Gift Aid for payments that are not voluntary donations for charitable purposes – tickets are generally fixed price - and also provide a significant benefit to the donor (eg admission to a fete or concert).
It is generally easiest to set a reasonable ticket price for the event, and then have a separate voluntary collection in which all taxpayers are encouraged to complete a Gift Aid envelope or make a similar identifiable GA gift. A “minimum donation of £X” is not a valid donation for Gift Aid purposes – it must be entirely voluntary. It is probably a good idea to ensure that a variety of differently valued donations are made to provide evidence that it was voluntary, and even that some attendees made no donations.
PCCs should always set reasonable entry prices for social events, otherwise they may face penalties for trading at a loss, which is not a reasonable use of charitable funds.
Auctions of gifts
Many churches organise auctions. The general rule is that only the “profit” (what the donor pays for the item less the usual retail price for the item) is eligible to be Gift Aided, and this can only occur if the cost price is announced to all participants beforehand. The normal retail cost price must be used, even if the item has been donated to the church. Gift Aid cannot be reclaimed if the item is not commercially available (eg home-made, or a one-off football signed by a famous player). So the cost of each item needs to be recorded in advance and publicised during the auction (eg in a handout to all participants). Each winning donor needs to complete a Gift Aid declaration for the net (bid price minus retail) amount.
Auctions of promises
Auctions of “promises” by supporters (eg to mow the winner’s lawn, or to baby-sit for an evening) are not generally commercially available, and so are NOT eligible for Gift Aid reclaims. The exception is if the “promise” is generally commercially available – for example a week’s free holiday in a cottage that is normally let at £100 per week; any “profit” over £100 is eligible for Gift Aid if the normal commercial cost is announced in advance.
Sponsored challenge events
Some supporters may be willing to undertake challenging projects (eg skydive, marathon, overseas treks) to raise funds for the church. Donations from any “connected persons” of the supporter (their close family members or their spouses/partners) are NOT eligible for Gift Aid (because of the "benefit restrictions"). The exception is when the supporter personally pays for all the basic costs of the challenge themselves, removing any benefit restriction.
Donations from unconnected tax-paying friends, work colleagues and church supporters can be Gift Aided, provided a full Gift Aid declaration is made. This can even be a “tick” on a sponsorship form that has the full Gift Aid declaration, providing the donor gives their full name, address and postcode. A sample sponsorship form is available to download from the Tax-Effective Giving website.