A gift aid health warning

12 December 2017

No one doubt the benefits of pupils having access to a laptop that is compatible with the school’s IT system. However, we have recently come across an arrangement for providing laptops to school pupils that purports to be eligible for gift aid but could result in an unwelcome surprise. There are strict rules relating to gift aid which can only be claimed on unconditional money gifts that do not result in the donor receiving anything other than minimal benefits in return. Any gift aid you claim where these rules are not complied with must be repaid to HMRC, together with interest and possibly penalties.

The scheme involved a school partnering with a commercial provider that sources the equipment. Under the scheme:

  • parents agreed to make 12, 24 or 36 monthly ‘donations’;
  • their child received a laptop, case, charger etc. for use at school and home;
  • children were not allowed to use a laptop bought direct by parents at school; 
  • some school laptops were available for use but these could not be taken out of school;
  • after the last payment is made the parent owned the computer and accessories;
  • parents were asked to sign a gift aid declaration.

It is likely that this sort of arrangement will not work as there was not really a donation. There was no voluntary element since parents had to pay the fixed monthly amount without the option to choose a higher or lower payment to participate. If they did not pay their child did not get the computer, so the arrangement fails on basic principles. In reality, this had the character of a lease purchase agreement. Interestingly the monthly donation plus gift aid was almost identical to the example high street cost finance cost given in the documentation.

Even if the payments were donations the benefit obtained as a result ie the retail value of the computer will be far more than permissible limits. 

If you have any queries about claiming gift aid please contact Graham Batty.

To read our full Autumn 2017 end of term report for independent schools, click here.