Meet our Expert
Andy Rich heads up the HW Fisher’s not-for-profit group, specialising on the charity side, acting for an array of voluntary organisations. He has a comprehensive understanding of the wide range of issues concerned around charity accounts. Additionally, Andy also has a significant portfolio of commercial clients operating in the media, property and retail sectors.
“Gift Aid on membership fees”
One area we are frequently asked about is Gift Aid on membership fees to a charity. Often membership fees are simply donations with minimal benefits to the member. Firstly you need to establish whether you are offering any benefits and if so whether they would breach HMRC’s rules. A benefit is any item or service given by your charity or a connected third party to the donor or to a person connected to them in return for a donation. Examples might include discounts on other services offered by the charity or vouchers that could be used for money off elsewhere. The benefit does not have to be monetary or have a market value either.
Some items offered by charities do not constitute a benefit, these include a simple acknowledgement of a donor’s generosity, a copy of the annual report, handbook or newsletter describing charity’s work, the right of admission to view charity property under certain circumstances and a fundraising event with a free invitation. Also, it is worth noting that where the benefit is a discount on goods or services which members may or may not take up, the value of any benefit can be based on the average take-up of the benefit by all the charities members when assessing whether the benefit limits are breached.
Where there are benefits, one possible approach would be the so called ‘split payments’. Whilst it might involve some work, you could separate the basic membership covering items which do not constitute a benefit (newsletter, e-bulletins) and apply gift aid to this part. If members wanted the additional services you would pay a higher amount. It would be important to survey the members to find out how many would continue to pay the higher rate for the further benefits to ensure that this new arrangement would not result in reduced income overall.
We have advised many charities on maximising Gift Aid and ensuring that their systems identify the opportunities to recover tax.