HMRC has published detailed guidance on claiming Gift Aid when goods are sold by, and the proceeds gifted to, charity shops.

Gift Aid applies only to gifts of money by an individual. So if a person simply donates goods to a charity Gift Aid does not apply. Charities cannot claim Gift Aid on donations of any physical items, such as clothes or books, only on donations of money. However, in certain situations Gift Aid can be claimed by charities or Community Amateur Sports Clubs (CASCs) on the income from the sale of supporters' goods.

There are three ways charity shops can operate the Gift Aid process - the Standard Method, Method A and Method B, where Methods A and B can be used from 6 April 2013 onwards.

The existing 'Standard Method' guidance has also been updated, and affects charity shops as agents selling goods on behalf of their donors.

If shops are operated by the charity directly, then the charity can use the Standard Method or Method A, while shops operated by a separate entity such as a company then the Standard Method, Method A or Method B can be used.

Method B is not suitable for CASCs because subsidiary companies of a CASC cannot donate profits to the CASC under corporate Gift Aid.

More details are available from > HMRC.