Gift of Goods to Charity Shops

Q: I have recently cleared out lots of old summer clothes which I have stored over the years. If I give these items to my local charity shop can I include a deduction in my tax return for Gift Aid. As I am a Higher Rate taxpayer will I receive 40% tax relief on this gift?

Lyn, Lincoln.

A: Unfortunately donations of goods and other items to a chosen charity can not receive tax relief under Gift Aid as the scheme only applies to gifts of money. However, your charity can act as an agent for you by selling goods on your behalf in the hope that you then donate the proceeds from the sales to the Charity.

If the donation of the eventual sale proceeds is made in this way then you will be able to include a deduction for gift aid in your tax return, and higher rate taxpayers will receive a further 20% tax relief either in the tax year you make the donation, or the year before if you choose to relate it back.

Initially, we recommend you speak to your local Charity shop to see if they will actually sell the goods on your behalf, as they must remain your property until they are sold. Also you reserve the right to keep all or part of the proceeds of the sale, so the charity must keep a record of the items they sell on your behalf and if they ask you to complete a Gift Aid declaration before the sale (in anticipation of the proceeds being gifted to them). The wording of that declaration must not force you to make a donation as you must retain a choice of whether or not to gift the proceeds.

We provide tax accountancy services in Lincoln and throughout the UK.  http://www.taxassist.co.uk