In a bid to maximize the benefit of donations of goods to charity shops, some UK charitable organisations are inviting donors of goods to consent to Gift Aid on the proceeds of their donated items. The Gift Aid system treats donations to charities as if the donor had already deducted the basic rate of tax from the amount. Charities can then reclaim this tax to increase the value of the donation. The tax authority Her Majesty’s Revenue and Customs (HMRC) states that Gift Aid applies only to donations of money (cash, cheque, direct debit, credit /debit card, postal order, standing order, or telegraphic transfer).

However, charity shops are able to claim Gift Aid on the amount that donated goods are sold for, if a donor of goods signs a Gift Aid declaration. By offering to act as an agent for the donor, selling the goods on their behalf, the charity is able, for tax purposes, to convert the goods into a cash donation.

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