REV BN 27: Gift Aid And Admissions
Who is likely to be affected?
1. Charities who normally charge the public for the right of admission to view property preserved, maintained, kept or created by a charity in relation to their charitable work who grant visitors free or reduced rate admission in return for a donation. The measure will not affect charities where admission is normally free to the public and any donation is made on a voluntary basis.
General description of the measure
2. As announced in the 2004 Pre-Budget Report, this measure
will stop charities simply reclassifying admission fees as
donations on which Gift Aid can be claimed and will instead
restore the key principle of Gift Aid, to promote additional
giving to charity. The measure will also extend the types
of charities that can benefit from the exemption which currently
allows certain charities to offer free admission to donors
without that being treated as a benefit when deciding whether
Gift Aid applies.
Operative date
3. For admissions on or after 6 April 2006.
Current law and proposed revisions
4. Gift Aid is a scheme that enables individuals to make
tax effective donations to charity. Gift Aid donations are
treated as having been made after the deduction of income
tax at the basic rate. As charities are exempt from tax on
that income, they are entitled to reclaim an amount equal
to the basic rate of tax suffered on the donation. This means
that charities benefit from an additional 28 pence for every
pound given. The donor must have paid enough tax to cover
the amount repaid to the charity and must make it clear to
the charity that they want Gift Aid to apply.
5. The scheme contains rules determining the maximum level of benefit a donor can receive in return for making a donation. Broadly, benefits are restricted to 25% of the donation, up to a maximum of £250 in any year. If the maximum level is exceeded, the donation will not be treated as a Gift Aid donation.
6. Currently certain heritage and conservation charities can offer free admission to donors in return for a donation to allow them to view the work of the Charity, without the admission being considered a benefit for Gift Aid purposes. From April 2006 we will broaden the scope of the exemption to apply where any type of charity grants to the public the right to pay to view property preserved, maintained, kept or created by a charity in relation to their charitable work.
7. Where the conditions in paragraph 6 are met and, instead of paying the admission charge, the visitor makes a donation, the new rules provide two alternative situations where the Gift Aid may apply.
- The first is where a right of admission given in return for the gift is valid for a period of at least one year for all times that the general public can gain admission. The number of visits within this twelve-month period should not be restricted.
- The second situation is where the right of admission
is for less than one year. The gift must be at least 10%
more than the amount that any member of the public would
have to pay to gain the same right of admission. So a donation
giving a right of admission for one day would need to be
at least 10% more than a member of the public would pay
for a ticket giving admission for a day. If there
is not a comparable ticket the value of the right of admission will not be disregarded in determining whether the benefits received in consequence of the gift exceed those allowed by the normal Gift Aid rules.
8. Where the new rules are met by the charity, the whole of the gift will be eligible for Gift Aid.
Further advice
9. If you have any questions about this change, please contact Adrian Cooper on 020 7147 2782, or the charities helpline on 0845 302 0203. Information about Budget measures is available on the Inland Revenue website.
Home Top | Menu
