As you may have read in the Pre-Budget report this week, the standard rate of VAT will be reduced from 17.5% to 15% on Monday 1st December. This has a positive affect on donations made through Justgiving because the VAT charged on our transaction fee (5% of a donation plus Gift Aid), will now go down.
So for every £10 donation, an extra 2p will go to the charity. It might not sound like much, but it all adds up.
Also, the monthly fee charities pay to be on the site will be reduced – the £15 plus VAT per month will go down from £17.62 to £17.25.
This reduction in VAT means we’ve had to reconfigure our back office processes pretty sharpish (like the fun we had earlier in the year with Transitional Relief on Gift Aid) and our finance and technology teams have worked really hard to change our systems with virtually no notice.
How are payments to charities affected by the change to VAT?
As you may know, we transfer donations to charities every week (on Fridays) and we’ll be making a donation payment as normal this Friday 28th November.
We will make an extra payment of donations and Gift Aid, where VAT on our transaction fee is charged at the old rate of 17.5%, on Tuesday 2nd December. The report available in the Charity Account on Wednesday. This will relate to donations made on Justgiving until the end of Sunday 30th November.
And because we will be making this extra payment to tie up all VAT at the old rate, the first payment of donations and Gift Aid with the new rate of VAT will be made in the week commencing the 8th December 2008, and not on Friday 5th December.
Just in case it helps, here’s how that looks on a calendar:
Gift Aid payments « The Justgiving Blog said
[...] Our systems and processes were adjusted last year on short notice to accommodate the change to the basic rate of tax and the introduction of Transitional Relief. (If you’d like to find out how we did this then you can read about it here) [...]