Giving Items to Charity Shops and Gift Aid

Over the Christmas period I cleared out lots of old clothes and items which I have stored over the years. If I give these items to my local charity shop, can I include a deduction in my tax return for Gift Aid as I am a higher rate taxpayer and will receive 20% tax relief on this gift?

1st January 2009

Unfortunately for the charity, when you donate goods and other items for them to sell, such donations do not qualify for Gift Aid relief, as it only applies to gifts of money.

It is possible, however, for a charity to act as an agent for you by selling goods on your behalf, in the hope that you then donate the proceeds from the sales to the charity. If the donation of the eventual sale proceeds is made in this way, then the charity will qualify for a tax refund of 25% of the net donation.

You can include a deduction for the amount donated plus the 25% received by the charity (the gross amount) in your tax return. You will receive a further 20% tax relief either in the tax year you make the donation, or the year before if you choose to claim relief in the preceding tax year.

Initially, we recommend you speak to your local charity shop to see if they will actually sell the goods on your behalf. Most charities do usually operate this scheme for items that are donated for sale, and they must write to you after the sale to confirm that you wish to treat the proceeds received as a donation to their charity.

Under this scheme, you reserve the right to keep all or part of the proceeds of the sale, so the charity must keep a record of the items they sell on your behalf.  They may ask you to complete a Gift Aid declaration before the sale (in anticipation of the proceeds being gifted to them) and if so, the wording of that declaration must not commit to you making a donation, as you must retain a choice of whether or not to gift the proceeds.

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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