Do Charity Auction purchases qualify for Gift Aid?

I recently attended a charity auction and purchased a number of items. As a higher rate tax payer, if I had made a cash donation I would be entitled to tax reluief at 40%, so am I able to claim tax relief on these purchases in the same way?   

1st November 2009

Officially, the payment for an item at a charity auction is not a gift to charity, but HM Revenue & Customs do recognise that when a person purchases an item at a charity auction they may intentionally pay more than it is worth in order to support the charity.

In these situations, the Revenue will treat such payments as donations qualifying for tax relief under the gift aid scheme,  providing that the other rules of the scheme are met and the benefits don't exceed certain limits.  

To work out how much can be considered as a qualifying donation for gift aid relief, you need to consider if the item is commercially available. Where you can buy the item, the amount over and above the retail price is considered to qualify for gift aid.

When it is not available, for example an item that is signed by a particular celebrity,  the value of the item auctioned is the price paid by the successful bidder. A bidder is likely to be prepared to pay more for such an item because it is unique.

As you have purchased a number of different items, each may be treated differently for gift aid purpose so we would recommend you discuss the special rules available in situations like this with your local TaxAssist Accountant.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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