Meet our Expert

Lizzie_JonesLizzie Jones – Associate, Farrer & Co

Lizzie joined Farrer & Co as a solicitor in 2007, after training at Baker & McKenzie. Lizzie advises sponsors of new charities, directors, trustees and officers of existing charities and other not-for-profit bodies, as well as individuals and companies wishing to make charitable gifts or do business with charities.

 

 

“We are considering running an event and would like to allow guests to claim Gift Aid on their ticket price. What legalities do we need to be aware of and how can we go about doing this?”

 

The answer

The essence of gift aid is it is available on cash donations to charity where the donor receives nothing in return or something worth only a small fraction of the donation. Where tickets are sold for an event, those buying tickets obtain the right to attend the event in return, and as a result gift aid cannot be claimed on the ticket price. Even where the ticket price to attend a fundraising event is set much higher than the price a donor would be willing to pay for a ticket to a similar event that was not supporting a charity, because the full ticket price must be paid to attend the event, the value of the benefit to the donor is deemed to be the entire price of a ticket (and hence no gift aid can be claimed).

When donors (or persons deemed to be connected to donors such as close family members) are given something in return for a donation of up to £100, gift aid can be claimed on the whole donation, provided the value of any benefits to the donor is worth less than 25% of the donation. For gifts up to £1,000 the maximum value of benefits received in return may not exceed £25 if gift aid is to be available. HMRC provides detailed guidance on how certain benefits to donors should be valued and it is important to value benefits correctly if the intention is to claim gift aid. The restrictions on benefits to donors apply where any benefits are given in consequence of making the donation whether the benefits are offered by the charity or a third party.

An alternative you may want to consider for your event is to set a ticket price and then to ask those attending for an optional donation on top, on which gift aid can be claimed. With this alternative it needs to be made clear to those attending that any donation is optional and that payment of the ticket price is all that is needed to secure entry to the event. It is usually advisable to ensure that the ticket price covers at least the cost of the event to minimize the risk of making a loss in the event that the level of additional donations is lower than expected.

It may be possible to split a payment between an amount to cover the cost of the benefit and an element of donation. This will only be possible if the benefit can be bought separately and the donor is aware of this. For example, say donors were asked to pay £250 for ten tickets to the charity quiz night. If the cost of entry to the quiz night was £10 and the donor knew they could have bought the ten tickets for £100 then the donor may elect to split the donation between £100 for buying the ticket and the remaining £150 as a donation on which gift aid can be claimed.

Please note: This advice column is a statement of the general position and should not replace tailored advice.