Gift Aid and museums

Gift Aid and museums - Gift Aid on admissions - Benefits to donors - Gift Aid tips - Gift Aid small donations scheme - Resources

Gift Aid is one of the most important tax benefits available to the museum sector and is a vital way of maximising the value of individual donations of all sizes.

The scheme is administered by HMRC and enables charities to claim a tax refund whenever they get a monetary donation from a UK taxpayer.

Certain restrictions apply, but the relief can be claimed on cash payments including admission fees, subscriptions, one-off appeals, sponsorship and monetary gifts. The scheme brings in over £1bn additional income every year to charities in the UK.

Gift Aid is relatively easy to set up but the MA is concerned that take-up levels in the museum sector are not as high as they could be.

Figures from HMRC show that, although Gift Aid has risen significantly in the past decade, total repayments to charities fell slightly in 2012-13 and have remained relatively static in the past three years, while Gift Aid claims through digital channels are also low. This indicates that a significant amount of Gift Aid is still going unclaimed.

As well as missing out on the financial benefits, neglecting to use Gift Aid has a wider impact because it hampers the sector’s efforts to argue persuasively for other tax reforms. The MA encourages all eligible museums to make full use of the scheme and do all they can to promote it to visitors.  

Who is eligible to claim?

Any museum that meets the legal definition of a charity can claim Gift Aid. You can apply online to be recognised as a charity by HMRC:

Benefits to eligible museums

With the current basic rate of tax standing at 20%, Gift Aid entitles charities to reclaim an additional 25p on top of every £1 donated.

£1.00 x 20/80 = £0.25

There is an additional incentive for taxpayers who pay higher rate income tax of 40% or 45% to donate, as they are entitled to reclaim the remainder of the tax relief themselves.

In an ideal scenario, a higher rate taxpayer would choose to donate this to the charity as well. This means that the total amount that can be reclaimed from a £100 donation by a 45% tax payer is £156.25 – a substantial boost in income.

Which donations qualify?

Donations must be:

  • from an individual, sole-trader or partnership taxpayer who has paid sufficient tax in the UK to cover the claim
  • a sum of money donated with no conditions attached
  • linked by an audit trail between the donor and the charity’s accounts
  • accompanied by a valid Gift Aid declaration.

Gift Aid can be claimed retrospectively up to four years after the end of the accounting year to which the claim relates.

Gift Aid declarations should contain:

  • The charity’s name
  • The donor’s name, including first name or initial plus surname (i.e. Mr John Smith or Mr J Smith). First names or surnames on their own are not accepted
  • The donor’s residential address, including house number and postcode
  • A description of the payment(s)
  • A declaration that the payment(s) are Gift Aided
  • A note explaining that the individual must have paid sufficient UK income or capital gains tax to cover the claim.

Declarations should be held as either scanned or hard copy documents for six years after the last donation.

General links and resources

Template Gift Aid declaration forms: