Heritage railway ticketing - best options , pro's and cons

£49. (Actually £49.50) You can't buy a one day only return ticket for the full length of the line. @Sidmouth4me has explained it quite well with his one, two or three stop example.
The annual pass is only a bargain if you can visit multiple times. I went to the Black Country museum last year and their admission 'ticket' is an annual pass. I haven't been back because its a 240 mile round trip and I've no reason to do it so not really a bargain for me.

 

So there's a couple of oddities there. The minor one is that if the fare for the one-day-only ticket is the same, why would you even offer that? Or why (except through ignorance) would anyone wish to buy one when, for the same price, you could travel all year round? [BTW - is that "whole line" price Pickering - Grosmont or Pickering - Whitby?].

I take your point about someone travelling multiple times not really costing anything providing they don't deter another traveller.

The tricky bit though is about price elasticity - £49.50 is quite a chunk of money - considerably more than any other line I can think of, and high in comparison to other whole-day attractions like Beamish. Let's suppose a more typical day-rover fare for a major line is around £30. The enthusiast living nearby who might have been minded to visit 3 or 4 times in the year clearly gets a good deal; but have you dissuaded the holiday maker staying for a week and aiming to do a variety of local attractions, who knows that they are very unlikely to return to make use of their annual pass, yet finds £49.50 pretty steep?

@Steve did the back calculation earlier in the thread, which (for my own sanity) I'll repeat: if you are making £450k in Gift Aid, then the fare income is about £1.8million from those passengers; and if they represent 70 - 80% of all passengers, then your total fare income is in the region of £2.25m to £2.5m. Which in turn equates to about 45-50,000 passengers buying the whole-line ticket. That seems an incredibly low figure - so what gives? Have you set your price point at a point where you are dissuading passengers from actually travelling, or turning someone who might buy a £30 all-line ticket into someone who instead buys a £15 fare between a couple of stations?

Either I'm missing something, or else those numbers seem very low for the scale of the business? I did do a bit of comparison of accounts. On the Bluebell, "fares and station admissions" represented 58% of Bluebell revenue in 2023 (£3.2m fare income on a £5.5m turnover). The closest comparison I could find on the NYMR was "railway operations" which represented 59% of revenue in 2023 (£4.7m out of £7.9m). I suspect that represents fares, since the other line items in the income statement - catering, shops, Armstrong Oilers and "other" pretty well matched the way the Bluebell reported its accounts ("Fares and station admissions", "Shops and bookstalls", "Catering", "Other" and "Filming"). But in which case - if total fare income is £4.7m but gift aid is only £450k based on a 70-80% take up, then it suggests a very large number of passengers are choosing not to do the whole line. At the very least, it suggests the "70/80% signing up for Gift Aid" is a bit disingenuous - what it really seems to mean is 70/80% of those doing the whole line, but most passengers are choosing a lower price point on which Gift Aid cannot be reclaimed.

Tom

 

There's a really interesting question here about season ticket pricing. If we were still taking annual holidays in Pickering, this pricing would be in the "no brainer" category; as it is, it is of questionable value. But for any railway (I've heard mention of Swanage, there must be others) that offers season passes, there must then be a separate question about price reductions for those who'd buy seasons.

Personally, I'd always sign up - partly altruistically, and partly because one of the wrinkles of Gift Aid is that Higher Rate Taxpayers can claw back the balance of the tax paid that the government don't give to the charity.

 

I assume, possibly incorrectly, that there will be a good chunk of group bookings on the NYMR, made through, e.g., tour operators who are unable to gift a payment for a service as a corporate body paying for a service, the impact of which would need to reflected in Steve's calculation.

 

I’d assumed the net effect was already included in the back calculation. I share the concern about what those figures suggest about demand.

 

There is no one day only all line return. It is the 12 month rover or a short trip; nothing else. I don't think that it's been mentioned that kids go free so, for families, some of the hurt is taken away.
As you have done, I've done the calculation several times and get the same sort of result. However, we have nothing concrete to go on, only vague references given by lineisclear and others so about £450K benefit and a 70-75% take up in gift aid, similar to what was stated last year. Last years accounts quote 'Traffic Receipts' at £3,925,425 excluding special events and diners so that can only really be ordinary ticket sales. These are £13.50 between two stations and £25.00 between three stations (i.e. Pickering-Goathland). Based on that and our simple calculations that indicates that something over one third of ticket sales are short trip ones and not eligible for gift aid in any case. If we say 50% of short trips are at £13.50 and 50% at £25 ( pure finger in the air), something like 75000 passengers are taking the short haul trip. This all adds up to about 120,ooo adult fare paying passengers. If we say one child per adult that brings the total passenger numbers up to 240,000 which is a realistic figure but it is all guesswork. What is missing from our fag packet calculations and would bring greater understanding is actual passenger numbers. Not many years ago these were shouted at the end of the year. In recent times they appear to be subject to the official secrets act, like a lot of other NYMR information. If they are in the accounts or anywhere else, public or private, I've missed them.
At the HRA conference the subject of gift aid was being discussed informally and I was told by someone that the railway won't be doing it next year. However, it was not from an NYMR source but it was a very good one and I'm quite prepared to believe it until someone informed says otherwise.

 

There is at least one situation where you can buy an all line return. I asked at Whitby booking office during the summer whether BR priv rate is still being offered (my parents have it). I was told that it was still with a full line return being £12 each and them not being 12 month passes. If my parents actually decide to make the trip up to Yorkshire next year, we might made up of it.

 

You can get these, just as you can get tickets under reciprocal arrangements with some other heritage railways and the HRA privilege scheme but these aren't generally available to Joe Public.

 

Just a bit more clarification; yes you can buy an all line day ticket! If paying £49.50 you are also then offered a complimentary Annual Pass (as well as asked the gift aid questions). As mentioned above, there are discounts available on all the day tickets (local resident, HRA, RST to name but a few). But if £49.50 is considered too expensive there is still the 2-stop day ticket at £25, eg Pickering to Goathland which for a 15 mile journey I would consider good value

 

@Jamessquared has kindly pointed me here re a post I made today on the Swanage Railway thread re the legality of getting Gift Aid on some forms of 'ticketing'.

I just do not have the time to go into this in any detail at present. But I wonder if the issue of Heritage Railways finding a way to 'convert' the benefit of selling a ticket to ride a heritage railway train into something that in essence is still a ticket to ride, but meets HMRC's interpretation of tax law re a Gift Aid permissible 'donation' has yet been fully tested?

I find it hard to accept that what could become a growing number of heritage railways looking to redefine what something, whose primary purpose remains a ticket to ride, actually purchases will not escape the gleaming eyes of tax lawyers working for HMRC or the eyes of a cash hungry government (aren't they all!).

Especially if other organisations find that by redefining what a purchaser is buying, have already started or will soon start to join in.

Just my two pen'orth.

Bryan

 

That cat is already out of the bag, and many attractions already charge on this basis. Arguably the surprise is that heritage railways have been so slow to the party.

Gift Aid works by transferring the tax paid to the charity that a taxpayer has donated to. It was originally implemented when Gordon Brown was Chancellor, and was designed to make it easier to give money to charity (before that, I believe there were Deeds of Covenant). It left a gap, where a charity earns most of its income from visitor payments.

Some of them created a loophole, where the visitor got free admission in return for a minimum donation (I remember doing this at a stately home about 20 years ago).

To plug this loophole, the government (I think under Blair, but certainly pre-Coalition) changed the rules so that attractions like these could receive Gift Aid on admissions, but with some conditions attached. From memory, there are three key ones:
1. For "donations" to be at a premium rate compared to "ordinary" admission (the NT do this)
2. For donors to get free re-admission for a year (I've certainly done this at the Eden Project), including
3. Stringent limits (5 days?) on how many days an attraction can limit the use of free admission

It's taken a while, I believe especially because of the interaction with the VAT concession on transport, but railways are starting to realise that this has potential. @Lineisclear has stated the amount that NYMR have made on it; there is no doubt that it is a very valuable contribution to their income.

For what it's worth, I think the current arrangements will remain more or less unchanged. Tinkering with a relatively straightforward regime would open up massive questions about how charities are funded and fixing the small element that is Gift Aid on admissions would require disproportionate political and administrative effort (Winter Fuel or school fee VAT are both relatively easy to apply; splitting Gift Aid would be much more complex and difficult to enforce).

 

Interestingly the HMRC themselves https://www.gov.uk/guidance/gift-ai...nd-cascs-can-claim-on#membership-subscription state:-

A voluntary donation that allows visitors to view your property may qualify for Gift Aid when they:

• are 10% or more than the normal admission fee, or
• allow admission for at least 12 months

​

This seems to be the mechanism followed by for example the Didcot Railway Centre and some other attractions who do not give a 12 month pass but offer, in accordance with gift aid rules, a standard admission for those not wishing to pay the +10% premium. The Talyllyn railway also encourages the donation ticket and hence gift aid by offering a drink voucher of slightly less than the donation premium which remains within the Gift Aid rules.

The HMRC rules also state:-

For visitors who choose admission for at least 12 months, you have 2 options:

• accept a donation and allow free admission for all visits during the period (minus up to five days a year when free entry does not apply)
• accept a donation and grant a right of admission on payment of a reduced fee, which must apply to all visits during the period (only the initial donation qualifies)

​

I'll leave others to speculate on what may be the correct price point to encourage visitors without turning normal admissions into annual passes.

 

Many thanks for setting down so much background, this particular element of Gift Aid is not something I've been aware of until fairly recently.

I certainly hope, that for the sake of those Heritage Railways going this way, that what they are doing is within the same tax rules that were established to allow Gift Aid for such as wandering around an old relic - although in my case I don't charge anything!

And I certainly agree with the final point you make re the political and administrative effort that would be needed to tinker with this element of Gift Aid.

Bryan

 

HMRC's stipulation that, to qualify for Gift Aid, you must give free admission for a year seems odd, when charities can give only limited membership benefits if they wish to claim Gift Aid on membership subscriptions. But then when was the Law logical?

 

It comes back to closing the original loophole - HMRC were trying to limit how far tax concessions would subsidise visitor attractions

 

So summarising, it looks like there are three possible models that allow collection of Gift Aid. (All of the following of course also predicated on your corporate structure being such as to allow Gift Aid, i.e. having a charity offer the service. Not all railways are set up that way, but some are and others are clearly looking at it).

1. Normal fare + 10%, no return visits
2. Normal fare, allow free return visits for one year on all but five days
3. Normal fare, allow discounted return visits on all days. (Fares paid on return days not gift-aidable).

Option 1 is perhaps the hardest sell, since the immediate benefit to the customer (except for "warm fuzzy feeling of doing the right thing") is limited, though I believe there is actually a net benefit cash to the customer if they are a higher rate taxpayer and do a self assessment tax return. (I've never been to an attraction where that is explicitly pointed out, though). I have sometimes seen the deal sweetened by offering a token valued at just less than 10% that can be redeemed in a cafe or shop - a way for the attraction to drive secondary spend.

Option 2 is a fantastic deal for the customer if the place you are visiting is one that is likely to see multiple return visits. From the attraction point of view, it seems really problematic in how it limits your capacity to offer special events. It must also be very difficult to find the sweet spot on pricing, since you are trying to set a price that is simultaneously not so high as to deter people likely to only visit once, and also not so low that in effect it becomes an incredibly attractive annual pass. (My personal view is that the NYMR, which use this model, have got the pricing all wrong, with a £49.50 ticket that is eye-watering for the single visitor, but very underpriced as an annual pass).

Option 3 seems to strike a balance between all those things and looks like a pragmatic option - not least because it encourages repeat visits, but for which some revenue will be generated. The big disadvantage to me seems to be about how you differentiate between a regular punter who can get discounted future tickets, and a member of the organisation who often have some kind of benefits package that includes discounted tickets. (For example, on the Bluebell, which is not a charity and doesn't offer Gift Aid, membership of the BRPS gives a 50% discount on tickets, including for galas). So you might discourage membership if people can get one of the key benefits just by buying their first ticket.

Of course, I can imagine there are some who would see my perceived problem with option 3 as actually a marked benefit, since they seem to consider members of heritage railways as an unwelcome and expensive encumbrance rather than as a source of dynamism and strength within the railway!

Tom

 

I'm not sure where Option 3 comes from? I understand you could offer discounts on return visits but using that model you couldn't recover Gift Aid on the original ticket purchase. If you're opting to recover Gift Aid surely there are only two options?

 

My summation of post 52, which in turn comes from online guidance.

My interpretation is that initial purchase (at full price) allows gift aid to be claimed, and gives one year of return visits at discounted, but not free, price, but on which GA can’t be claimed on the price paid for the return.

Tom

 

If the rules allow the organisation to claim Gift Aid and the customer to enjoy a year's free travel, it would seem very strange not to allow the lesser benefit of discounted travel.