The Chestnut Hospice in south west Birmingham provides care to patients with incurable conditions. It is a registered charity and, to support its work, it has a number of charity shops in the local area. These shops accept donations of clothing, furniture, books, CDs, DVDs and other items which are then sold to members of the public, raising funds for the hospice. All items donated are recorded as stock items at the shop receiving them. Each item is given a brief description and is priced by one of the volunteers in the shop. Sometimes items are transferred to one of the other shops for sale._x000D_
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The Chestnut Hospice already asks supporters making donations of money to make a Gift Aid Declaration. The Gift Aid scheme is for gifts of money by individuals who pay UK tax. Gift Aid donations are regarded as having basic rate tax deducted by the donor. Charities take your donation – which is money you’ve already paid tax on – and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on its ‘gross’ equivalent – the amount before basic rate tax was deducted. Basic rate tax is 20 per cent, so this means that if you give £10 using Gift Aid, it’s worth £12.50 to the charity._x000D_
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They now wish to extend the use of Gift Aid to items donated to the charity shops. The way this works is that an individual takes goods to a charity shop and agrees that the shop will act as their agent in selling the goods (for which a commission will be deducted from the proceeds). A Gift Aid declaration is completed by the individual at this stage, if the charity does not already hold one. The charity marks the goods in some way so that the sales proceeds can be linked back to the donor. When the individual brings the goods into the shop, the process is explained to them and the staff in the shop can ask them if they would be happy to donate the proceeds without receiving a letter if the net sales proceeds from the goods are no more than £100 in the tax year. If the individual agrees to this, the member of staff needs to explain to them that the charity shop will contact them if the net sales proceeds from the goods are more than £100, so the individual can then confirm that they also want to donate the proceeds in excess of £100. The individual should also be asked if they would like to receive a letter at the end of the year informing them of the total amount raised from the sale of their goods. The charity must use standard template letters from HMRC when writing to the individual._x000D_
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In order for the tracking of Gift Aid items to function, each donor will need to be allocated a unique Donor ID and each item that they donate will have a unique barcode identifying it as a Gift Aid item. This will then be scanned when the item is sold, recording the sale and enabling a running total for each Gift Aid Donor to be maintained. Non Gift Aid item sales also need to be recorded. At the end of the tax year the charity needs to be able to run reports identifying all of the Gift Aid sales so that the tax can be reclaimed from HMRC._x000D_
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Further information on the use of Gift Aid by charity shops can be found here:_x000D_
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