October 1 1990 saw the start of the scheme known as Gift Aid which was announced by the Chancellor the previous March.

The simplicity of the scheme and its benefits have yet to be taken advantage of by most arts organisations which are also registered as charities,(and is in marked contrast to the Inland Revenue’s moves to tax arts sponsorship incomes – see AM, 142). This month we consider the relevance of Gift Aid to arts charities.

Gift Aid is available for one-off donations of between £600 and £5m to registered charities. In future arts charities will be able to claim back from the Inland Revenue the 25% base rate income tax paid by the individual Gift Aid donor In other words, if I give a donation of £600 to an art organisation with charitable status, my donation will be worth £800 to the charity. In addition to this, as another encouragement to giving, higher rate tax payers will themselves be able to claim back the further 15% from their local tax office. The relatively high starting figure of £600 suggests that the government introduced the scheme to encourage large or corporate donations, but there is increasing pressure from all charities in the arts and in other areas to reduce this figure to £250.

One of the advantages of Gift Aid is that it has been kept deliberately simple. When making a Gift Aid donation all you will need to do is to complete a certificate – Rl90(SD) – confirming that you will be paying at least as much income tax as the charity will be claiming back. Forms can be kept by the charities or be obtained from the two special inland revenue addresses below. Charities will be able to ask donors to fill in forms retrospectively so the donation can come first, the administration second. The simplicity of the arrangement compares favourably against the problems of charitable covenants, where donors have to make a commitment to regular payments for a period of at least four years and a formal legal agreement must be signed.

The restrictions on the Gift Aid schemes are simple but important. First, non-tax-payers cannot take part in the scheme; indeed, they risk being asked to pay the tax their favourite charity has claimed back from the Inland Revenue. Second, proceeds of fundraising events – like sponsorship money – are ineligible as are the donations where there are strings attached like occasions where the giver or the giver’s family expects to benefit directly. The advantage of Gift Aid to smaller arts organisations is clear; it enables them to maximise their income from donations with the minimum of administrative hassle.

For further information contact:

  • The booklet: Gift Aid – A Guide for Donors and Charities – is available from local tax offices.
  • Gift Aid certificate R190 (SD) can be obtained from Inland Revenue’s Claims Branch (Charity Division), UK, Wales & NI: St John’s House, Merton Road, Bootle, Merseyside, L69 4EJ, tel: 051 922 6363
  • Scotland: Trinity Peak House South Trinity Road, Edinburgh, EH5 3SD, tel: 031 552 6255.

© Henry Lydiate with James Odling-Smee 1991

This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.