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HMRC could replace rules on benefits given to donors

HM Revenue & Customs could scrap rules limiting the benefits a charity can give each individual donor.

Current HMRC rules say donors can only receive benefits worth 5 per cent of the value of their donation, or £2,500, whichever is lower. Benefits must be considered at fair market value, rather than the cost to the charity. If the charity gives out more than that to a donor, it cannot claim gift aid on their donation.

Benefits include anything given to donors, from calendars, mugs or T-shirts sent to donors, to tickets or advance screenings for arts organisations.

At present, charities complain the guidance around donor benefits is complex and inconsistent, and that it is hard to track which benefits go to which donors, and what the value of those benefits is on the open market.

Speaking at the recent Charity Tax Group annual conference, David McDowell, an official at HMRC, said his organisation is exploring a complete revision of the rules, although it is still at an early stage in the process.

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