Tax: HMRC Rules on Benefits to Donors

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HMRC are exploring a revision of the rules on benefits given to donors. Currently donors can receive benefits from a charity in accordance with the HMRC benefit limits as follows:
Amount of donation Maximum value of benefits
£0 to £100 25% of the donation
£101 to £1,000 £25
£1,001 + (made on or after 6 April 2011) 5% of the donation (up to a maximum of £2,500)

In addition, currently benefits are assessed at fair market value rather than the cost to the charity.

An official at HMRC has announced that they are considering revising the rules to allow:

  • Benefits of any value to individual donors as long as the total benefits are below a certain threshold (possibly 1% - 5% of all gift aid claimed);
  • Benefits to be assessed at cost to the charity; and
  • A reduction in a charity's gift aid bill, rather than a removal of the right to claim altogether, if a charity exceeds its limit. 

Key action points:

  • HMRC have advised that they are at the early stages of considering these revisions, however charities who think this may impact them should keep a close eye on any future publications from HMRC.