What’s the difference between an entrance fee and a donation?

Paul Lewis reveals why gift aid costs more

stately home castle ashby northamptonshire midlands england uk

If you’re thinking of visiting a stately home or historic gardens at Easter, have a think about gift aid. The principles are well known to Radio Times readers.

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You make a gift to a charity (or a community amateur sports club, say) and for every pound you donate, the Government gives an extra 25p to the charity.

The scheme is worth more than £1 billion a year to charities. However, one thing puzzles some of you. A reader from Buckinghamshire points out that the price-lists for entry to some attractions show a higher price if you choose to “gift aid” your entrance fee, and asks, “How can charities such as the National Trust, English Heritage and, doubtless, many others justify charging more for gift-aided admissions?”

The answer is a legal one. Any donation freely given to a charity can be gift-aided.

However, if you buy something from a charity – perhaps a scarf in a gift shop – then you cannot do that through gift aid because you’re receiving something in exchange.

The question is whether your entrance fee is a donation or a fee to enter.

When you pay to visit Blandings Castle, can the Emsworth Educational Charity that now owns it claim gift aid on the entry price? You buy a pleasant couple of hours looking round the Tudor house and gardens but is that a gift or a purchase?

HMRC says that if a visitor pays the normal price of entry, that is a purchase and not eligible for gift aid.

But if the visitor makes a donation of at least ten per cent more than the entry price and that donation allows entry, then gift aid can apply to the whole amount.

So if Blandings Castle has a standard charge of £10 for visitors, that isn’t eligible for gift aid. However, if it says that visitors who make a donation of at least £11 will get free entry in exchange for that gift, the whole amount is eligible for gift aid.

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For an extra pound on the cost, then, the charity claims gift aid on the whole £11, recovering £2.75 from the Government. But remember that if you don’t pay income tax, you cannot use gift aid for your donations.