Gift Aid FAQs

Here are answers to some of the questions we hear most frequently on Gift Aid.

Gift Aid FAQs

Why should membership subscriptions qualify at all for Gift Aid? They aren't donations!

Membership subscriptions are indeed not donations, but can qualify for Gift Aid due to a concession offered by HMRC. They can be eligible provided that they qualify according to HMRC Gift Aid rules, and that any benefits received by the person paying the subscription satisfy a number of conditions stipulated by HMRC.

This is explained in our guidance on Gift Aid, and in the HMRC's detailed guidance notes on their website.

The assessment and calculation criteria is complicated for us to work out. Could Making Music have made it simpler?

In 2011 we were faced with a situation where HMRC was considering removing the Gift Aid concession altogether if we didn't come up with a method of excluding tuition from the Gift Aid calculation. Although the resulting method is more complicated than any of us would have liked, it remains a much better option for our members than simply not being able to apply for Gift Aid on subscriptions at all.

The guidance is fairly loose on the matter of how to make an assessment. This is deliberately the case as we cannot decide how much tuition is involved in a particular group’s activity. The situation will vary substantially group to group and ultimately it is the trustees who have to make the decision. Our guidance aims to provide a framework to help groups build a case for Gift Aid in their particular circumstances.

How will HMRC assess claims for Gift Aid?

Gift Aid claims are selected on a risk basis and it is unlikely this will change in the future. If the repayment team at HMRC highlights a potential problem with a claim, it will be passed to the Compliance Team for review.

As we have agreed guidance around subscription fees and tuition we encourage groups to consider and take a view on this matter themselves. By considering and implementing the guidance HMRC will honour a case for support presented by that group, provided they can demonstrate their assessment reflects the guidance.

HMRC has assured us that they understand that all groups are different, and will honour the expertise on this matter of any particular group in question. Provided that a group has considered the guidance and applied it to its own situation, HMRC will accept the resulting self-assessment and calculation without issue.
It is also a good idea to keep minutes of any meetings were Gift Aid was discussed and clear documentation of how and why decisions were made, and your justification for these decisions.

How do I contact HMRC to discuss a particular question about Gift Aid?

HMRC has a helpline devoted to charities which you can contact on 0300 123 1073 (8am to 5pm Monday to Friday).  Gift Aid queries is number 4 on the first automated menu.

How can we accurately describe how much tuition is involved as part of our rehearsal process?

In practice, the provision of tuition arguably varies not only from group to group, but piece to piece, and individual to individual; it is difficult to apply a 'one size fits all' equation to any one scenario.

In our concern to persuade HMRC to allow groups at least to make their own interpretation of any guidance, rather than being forced to apply a blanket restriction across all members, it is also true that there is a fair amount for groups to take a view on and consider what realistic and practical steps forward they can take. It's really important that it's practical, of course - something that can be applied systematically and comfortably, without it requiring too much scratching of heads and anxiety over accuracy. But it will never be entirely accurate, or pertinent to every individual within a group.

We advise that the best course of action is to take a view on a general or typical situation, and apply that as consistently as you are able. This doesn't mean necessarily attributing the whole MD fee to tuition, but you might, for example, take a view that the earlier stages of rehearsals require more in tuition than the later ones, and pro-rate a tuition fee accordingly.

Our income from membership subscriptions does not cover our costs. How do we calculate the tuition fee per member?

Where income from membership subscriptions does not cover the fixed costs of a group, the calculation of the tuition fee per member can be made by offsetting the total tuition cost against other fixed costs.

Here are sample workings to demonstrate:

Membership income
Annual membership payment = £100
Number of members = 75
Total income from membership payments = £7,500

Fixed costs
MD = £2,500
rehearsal venue = £5,000
Music hire = £500
Accompanist £1,500
Total = £9,500

Assuming tuition is deemed to constitute 100% of MD fee.

tuition/fixed costs = £2,500/£9,500 = 26%
tuition proportion x membership payment = 26% x £100 = £26

Results in a tuition fee of £26 and a membership subscription of £74, the latter of which is eligible for Gift Aid.

We don’t give individual tuition to members – does this guidance affect us?

An individual benefitting from tuition is not the same as a music director providing individual tuition, and it's important to take a broad, practical view of the nature of tuition and how members might benefit from tuition as part of the rehearsal process.

However, there will undoubtedly be some situations where a group believes that no tuition is provided through the rehearsal process, and this is an acceptable situation if it reflects the reality.

HMRC does not expect it to be the case that members receive individual tuition as such, but if there is a perceived benefit to the individual in terms of receiving tuition (as a member of the group) then this is where the issue lies in terms of a conflict with the concession to membership subscriptions within the Gift Aid rules.

It is also important not to consider the nature of ‘tuition' too narrowly; it is not just about teaching notes and correcting errors, but about enabling an individual within a group to learn a particular piece, or how to sing or play with others in the group, and so on.

There will be some cases where groups do not believe that tuition is provided to members attending rehearsals, in which case a membership payment will not include a tuition fee. This is perfectly acceptable if the committee of that group has considered and applied the guidance and resulted in such an assessment and corresponding nil calculation.

We do not pay our MD. Do members still need to make a tuition payment?

If your conductor or MD is unpaid, there is no perceived financial value in the provision of tuition, and therefore no tuition fee will be due.

If our Music Director’s fee is paid for by another means (eg a grant), is there still an implicit tuition benefit to members?

Yes, members should continue to make the tuition fee payment as per the guidance.

The member still receives an element of tuition from the Music Director as a result of being a member, even though this cost is covered by a grant/sponsorship. Therefore to avoid any benefit implications, the members should continue to make the tuition fee payment as per the guidance.

Can I pay on behalf of members of my family and still qualify for Gift Aid?

You cannot claim Gift Aid on a payment made by an individual on someone else's behalf, unless they are minors. However, family membership subscriptions are eligible within the Gift Aid rules.

If a tax-paying individual pays a membership subscription on behalf of someone else (eg a spouse), HMRC considers that although the payment is made to the charity the gift is to the person whose membership subscription is being paid. Such payments will not qualify for Gift Aid.

However, where minors are concerned, it is possible for a parent to make a payment on behalf of a child under 18 and for this payment to be eligible for Gift Aid.

In the case of family membership subscriptions, a subscription payment will qualify so long as the payment secures membership for the individual making the payment as well as any others in the same family, provided that all other conditions (as explained in our information sheet on Gift Aid) are met.

Can a group make its case to HMRC in advance?

HMRC is unable to approve calculations in advance. However, groups applying the guidance should have confidence in their assessments and calculations.

The guidance is clear on the procedure that music groups should follow, so you should have confidence in your decisions.

We advise that you document the rationale underpinning your assessment and calculation of Gift Aid, which you can use as a case for support in future.

HMRC has assured us that it will accept a group's self-assessment of its position with regard to tuition, and any corresponding calculation regarding a tuition fee, on the understanding that its committee has considered and implemented the guidance, and is in a better position to judge this than HMRC.

We are still having problems trying to work out how to interpret the guidance. What should we do?

If you are having seriously difficulty interpreting our guidance in your specific case do please get in touch, and we'll do our very best to help.

Example workings: an experienced choir

Here's an example of an assessment made by a member choir made up of experienced singers, with a low tuition fee.

Members expected to rehearse at home in advance of rehearsals. Tuition element is deemed to be low, calculated at 20% of the MD fee.

Income from subscriptions = £7,350

Fixed costs:

MD fee = £3,745

Venue hire = £1,233

Accompanist fee = £2,068

Piano tuner = £62

General expenses = £292

Recruitment expenses = £245

MM sub & insurance = £295

Total costs = £7,940

Annual membership payment = £145

Because the fixed costs of the choir are greater than the income generated through subscriptions, the tuition cost per member can be determined by calculating the tuition cost as a proportion of overall fixed costs:

1. Tuition portion of MD fee = 20% of £3,745 = £749

2. Tuition cost as a proportion of all fixed costs = £749/£7,940 = 9%

3. Tuition fee per member = £145 x 9% = £13.05

4. Membership subscription eligible for Gift Aid = £145 - £13.05 = £131.95

Example workings: youth orchestra providing tuition as part of its educational rehearsal process

Youth Orchestra X provides rehearsals in furtherance of its educational objectives. Tuition is provided to the young members through the activities of the orchestra.

Calculating the tuition has been assessed as follows:

  1. The orchestra has 4 paid Staff, but does not expect them all to be ‘training’ the players all the time, except when sectional rehearsals are taking place. Sectionals take approx 15% of the time, leaving 85% for full rehearsals. Allocate ¼ of this 85% to tuition by the conductor, with the 3 other staff excluded. (there are always several other responsibilities alongside their artistic support, such as registration, music issue, preparing instruments, etc). Thus overall initial estimate of ‘tuition’ element is 15 plus ¼ x 85 = 36.25%.
  2. Contribution to the ‘artistic preparation’ as opposed to providing tuition further reduces the figure in 1. as players themselves put in their own skills and practice outcomes. Estimate the effect of this to reduce 36.25% by 1/5 to 29%.

Hence, actual ‘personal tuition benefit’ % of overall staffing costs is assessed at 29%.

Example case study: an auditioning choir performing to a high standard

Here is the assessment made by an auditioning choir performing to a high standard, and determining that there is no tuition provided to its members through the rehearsa process.

This example is for a choir performing to a very high standard, with membership only open to those with a sufficiently high level of vocal and musical expertise, ascertained by individual audition.

Members are regularly re-auditioned to ensure that this standard is maintained.

Rehearsals are employed solely as preparation for concerts, in which the music director indicates the musical interpretation to be used in the concert performance, including dynamic markings and breathing.

Members are expected to undertake private study to familiarise themselves with the music, and have private singing lessons to improve their vocal technique, if necessary.

After the first rehearsal for a concert, when the music is merely ‘sung through’, a rehearsal schedule is then issued so that members are aware of the music to be covered at each rehearsal and can therefore prepare themselves in advance.

The choir undertakes a minimum of five concerts each year, and in most seasons holds a day’s workshop, also open to the public, which choir members are expected to attend but must pay an additional sum to do so - and on which Gift Aid is not claimed.

For these reasons, the choir's committee does not consider that any part of the annual membership subscription relates to tuition, and Gift Aid is claimed in full against the membership payments made by members.

Example case study: choral society itemising MD fee

A choral society has come up with the following methodology:

Our Musical Director is paid just one fee for all activities he undertakes.

We asked him to do a breakdown of these activities and estimate how much time he spends on each and thus deriving a cost for each.

For the rehearsals, we also asked him to estimate how much of his time is spent doing what we would term 'note-bashing'. I.e. getting people up to speed on the music. Obviously this will vary depending on the number of piece(s), their difficulty and how many sight readers we have. We have stopped there and not included interpretation nor concert preparation.

Activity Hours per Activity Cost per Activity

Annual Honorarium = £1,400
Total Hours contributed by MD = 350
Actual hourly rate = £4

Breakdown of work
Programme planning = 9 hours
Obtaining/printing/copying music = 2 hours
Soloist selection = 1 hour
Associate soloist discussions = 5 hours
Choir meetings/e-mail discussions = 30 hours
Organising instrumentalists = 3 hours
Preparing scores/parts = 120 hours
Rehearsal preparation (40 rehearsals @ 2.5hrs per rehearsal) = 100 hours
Rehearsal direction (40 rehearsals @ 2 hrs per rehearsal) = 80 hours

Only 25% of the rehearsal direction time would qualify as a tuition component = 20 hours

If there were ‘n’ people in the choir then this cost would be shared equally, noting that the whole amount may not be recoverable as not every member may be eligible for Gift Aid nor have completed the appropriate form.

I.e. if a particular member had contributed £63 in subscription for the year, the amount that could be reclaimed would be £63 less (£80/n).

Each year, we would ask our MD to confirm any changes in the above breakdown.

Example case study: choir undertaking an exercise to assess tuition in rehearsals

One member choir decided to make an assessment of its rehearsals to determine the element of tuition in the most objective way possible. Here is how they went about it:

Three members of the committee agreed to carry out the assessment.

We selected an hour slot at a time on two or three separate rehearsals spread through the rehearsal cycle and all assessed the same time slot.

We used a sheet divided up into 2 minute time sections and simply tick or cross as to whether tuition has in our opinion taken place. (We discussed our understanding of tuition versus artistic development at some length.)

Then we added up the amount of time we have said tuition has taken place and expressed it as a percentage and compare our figures which turned out to be very similar. ie 7--10% depending on the stage of rehearsal. We do synchronise watches.

E.g. Time Tuition - Yes/No

8pm
8.02
8.04
8.06
an so on.

Issues which emerged were where to sit to try to avoid the music director's line of sight, and the need to do this at the start of a session or after an interval to avoid disruption from movement.

We reckon the keeping the sheets and conclusions from 2/3 sessions is good evidence that we have thought about and researched the basis for our conclusion re. the amount of tuition which takes place.

Very simple but it does the job.