Money
Managing your money
Gift aid spreads
The hospice and homecare charity Sue Ryder Care has pioneered an innovative way to reclaim tax on the value of the books, clothes, and bric-à-brac people take into its 370 shops, writes Paul Lewis
Until now, Gift Aid only applied to donations of cash. When a taxpayer gives money to a charity, the Treasury refunds the income tax that has been paid on it, boosting donations by 28p in the pound. Donated goods were not covered, but Sue Ryder has found a way to include them.
When someone goes into one of its shops with their goods they are asked to fill in a Gift Aid form. They are then assigned a unique six-digit number that is put on the price tag of each item. When that item is sold, the amount charged is recorded at the till. In that way the cash raised from every gift can be traced back to the taxpayer who gave it.
Each month donors are sent a statement setting out what their goods have raised and how much Gift Aid tax has been reclaimed. If the donor is a higher-rate taxpayer they can then use that information to reclaim the higher rate tax when they fill in their self-assessment form.
Sue Ryder Care says it has raised an extra £1 million from Gift Aid in the first year of operation and reckons if all charities with shops adopted the scheme they could boost their annual income by £30 million in tax relief.
* Paul Lewis is the editor of Saga Magazine's Money News section and the presenter of BBC Radio 4's Moneybox. This article first appeared in the May 2008 edition of Saga Magazine. Paul's opinions are his own and for general information only. Always seek independent financial advice.
