You can give modest benefits to a donor (or to people connected to the donor) as a token of appreciation for a donation, provided you don't exceed certain limits. If you exceed those limits, the donation won't qualify for Gift Aid.

People 'connected to the donor' include:

• Donors must pay enough UK income tax and/or capital gains tax themselves to cover the amount of tax the charity will reclaim give the charity a gift aid declaration, which should include
• Their name
• Their home address
• The charity's name
• Details of the donation – saying that it is a gift aid donation
• Confirmation that they have paid UK tax – to cover the tax the charity will reclaim.
• A declaration can be made to cover individual donations, a series of donations, can cover donations made during a specified period or to cover all future donations. They can also be backdated for up to 6 years prior to the date of the declaration provided the donation was made since 6 April 2000.

There are two donor benefit limits. If either is exceeded the donation doesn't qualify for Gift Aid.

The two limits are made up of:

The value of benefits provided in relation to the amount of a particular donation (called the 'relevant value') - as shown in this table; these limits apply separately to each donation
Limits on benefits you can provide in return for Gift Aid donations Amount of donation

Maximum value of benefits to the donor

• £0 -100
  25% of the donation
• £101 -1,000
  £25
• £1001+
  2.5% of the donation

An overall benefit limit of £250 arrived at by adding the value of benefits provided for the current donation to the value of any benefits already provided by your charity to the same donor in the same tax year, as a consequence of Gift Aid donations (the 'aggregate value')
For some types of benefits you will need to work out the annual value before applying these limits.

Items that don't count as benefits
Some items don't need to be treated as benefits, for example:

• Literature describing the work of your charity such as newsletters, annual reports or a members' handbook .
• An acknowledgement of a donor's generosity say in a printed brochure or on a plaque. For more information please see the detailed guidance about what is not a benefit.

Working out the value of benefits
When applying the benefit rules you must use the retail value of the goods or services, (ie the sale price to the public), not the cost to your charity,

If you provide a donor with a pen which can be bought locally for £10 it doesn't matter that it only cost you £7.50 at the wholesaler. The pen is worth £10 to the donor and this is the value you must use.

Where an item doesn't have an obvious retail value you need to use the perceived value of the benefit to the donor - perhaps by considering what a third party might pay or by looking at similar transactions in the commercial sector.

Benefits made available to the donor - as a consequence of their donation - but provided by a third party (even if they are at no cost to the charity) are still benefits for the purposes of Gift Aid and should be valued and accounted for in the same way.

Options for donors to split their payment and 'buy' the benefit
In certain limited circumstances, where the value of benefits on offer will exceed the Gift Aid limits a donor may opt to 'buy the benefit'. This can only be done where:

• The benefits concerned have a clear and easily ascertainable retail value which is known to the donor when they make the donation
• The balance of the payment is clearly intended as a donation and the donor:
• Specifies their intention to buy the benefit before or at the time of making payment makes it clear that part of the payment made is to purchase the benefits and that the additional payment is intended as a donation for Gift Aid purposes.
• Your charity and the donor should keep evidence of this arrangement (for example an exchange of letters).

If someone who donates pays the basic rate of tax, they cannot claim further tax relief on the payments higher rate of tax, they can claim higher rate relief on the payments by entering the donations in the gift aid box on their self assessment tax return. Those who donate, and who receive a Form P810 can declare their gift aid payments on it.