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

I agree with you Tom from a railway point of view then 3 may be the best option. Now if @Lineisclear is correct and it is not available, it seems strange, but we are talking about a tax organisation, so logic appears to go out to the window (at least from my work experience)
But your point re the 50% members discount at the Bluebell does of course also throw up a different issue around what membership actually gives you. Back when I joined the Bluebell in the early 90's it gave you an informative A5 sized magazine. Now the A4 version barley warrants a glance from me as virtually everything will have been covered on forums, magazines or your excellent Bluebell Times.
Now I live a way off the 50% I just regard as a contribution to a nights hotel cost for a visit. Option 2 would probably fill the same issue. Option 1 is a "hard sell" to me it is a donation disguised as something the government is giving. Plus of course you have to pay tax to be eligible. When my wife was self employed her accountant told her to "never do gift aid" I suspect as she rarely made a decent profit she never paid enough tax. Bank of husband was the source of her money.

But other railways of course have lesser discounts, no discounts so what does membership bring?

My local line used to have membership, a residents card, and a annual pass. Discounts being 25%, 33% and none of course as it is a one off payment.
The residents card was rebranded and available to all, at a cost less than membership with a bigger travel discount. This may or may not have now been removed as the fares pages has been updated on the website, offering savings for booking in advance (up to 23:59 the day before) at prices I believe are slightly different (at least for the day freedom ticket) to what is shown on the current poster outside the station, but no mention of any other option other than the annual pass.
Option 2 certainly and maybe Option 3 would make an annual pass not a good deal if the railway were to go down the gift aid route. But for any line that is not around 20 miles long is the fare going to be high enough to even consider a years free travel. Especially if those lines are near a big city conurbation or somewhere with a high percentage of holiday homes and hence people may reuse the pass "just because it is there" and perhaps in locations where say secondary spend on food is likely going elsewhere due to competition.
The NYMR (if I am not infringing some copyright by using that FLA) is not that close to a large conurbation really, has no good rail links via the national network, and probably a lower proportion of holiday homes than say Dorset, Somerset or Hampshire.

I am sure someone could write a thesis on Heritage Line pricing and members benefits.

 

A side note on "option 1". For the surprisingly large number of people who are Higher Rate Taxpayers, the way that Gift Aid works means that the 10% premium can be worthwhile. The railway gets the 25% Basic Rate tax that the donor has paid, while the balance can be returned to the taxpayer through their tax return.

 

How does that work as I was a higher rate taxpayer and I was totally unaware that HMRC ever gave me "anything back". Where should I have been made aware of that?

 

If you do a Self Assessment Return, you are asked about your charitable donations. They work to reduce the amount of tax you owe.

It's fair to say that HMRC don't heavily advertise this - and it's definitely a case of "jam tomorrow".

 

That would explain it as I have never filled in a self assessment form in its on line form, and to be honest I would never have regarded a gift aided entrance to somewhere to put on a tax form anyway, even if I could remember it by then.
A win for HMRC I guess. The same bunch who for years after the year I reported a Capital Gain seemed convinced I would be having the same gain every year. (I would have been happy to go with that if I had a property to sell every year)

 

It's worth keeping a record - especially if you give regularly to an appeal. That £10/month becomes £120/year, and it doesn't take many of those to be worth keeping tabs

 

Option 2 with the free return ticket is only available when the railway/whatever is normally open to provide that option so, if the option is a full line journey and trains on that day only go part way (e.g. Santa specials) they don't count.
I've never heard of option 3 but that is not to say it doesn't exist. I haven't found it on HMRC website though.

 

Gift aid benefits higher rate tax payers by increasing the basic rate band by the amount of the donation .£100 therefore reduces tax by £20.
Basic rate tax payer no tax benefit to the tax payer .
Non tax payer gift aiding would end up (via tax return ) with a tax charge of the amount paid to the charity so HMRC not out of pocket …

 

Not to mention nasty letters to the taxpayer and the potential for penalties. And I know that HMRC can join the dots.

 

Tom's summary of options based on post 52 can easily be related to the section copied directly from https://www.gov.uk/guidance/gift-ai...d-cascs-can-claim-on#viewing-charity-property which is below. Tom's option 3 is covered in the final line of the section about when visitors pay just above the terms and conditions in the final paragraph which should also be carefully considered to ensure they are also met if a service is cancelled.

Viewing charity property
Entry fees to visit and view your charity property do not qualify for Gift Aid because they are not a gift. But a voluntary donation that allows visitors to view your property may qualify for Gift Aid.

Donations qualify when they:

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

You must offer visitors a choice to pay the normal entry fee only or the admission price plus a donation at the time of entry.

Information you must provide to visitors
Visitors must receive the same right of admission whether or not they pay a donation.

You’ll need to clearly advertise the normal entry fee and make it clear to all visitors that they will be allowed entry when they pay the normal admission charge if they choose not to make an additional 10% voluntary donation.

You can explain the choice to pay the standard entry fee or the 10% or more donation amount on your admission signage and website. Staff or volunteers should explain these options at the time of asking for payment.

If you do not give visitors a clear choice to pay the standard entry fee or make a donation of 10% or more, then any payment that exceeds the standard entry fee by 10% or more is not a freely-given gift. In this case, payment would not be eligible for Gift Aid.

When visitors pay
When a visitor voluntarily agrees to pay a donation of 10% or more, you must ask the donor:

• is the donation for entry by members of the donor’s family only

• for a written or verbal Gift Aid declaration

If the visitor gives you a verbal declaration, you must give them written confirmation and keep a record for yourself. This is usually included as part of the payment receipt issued with entry tickets, eg on the till receipt.

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)

Terms and conditions
A voluntary donation that allows visitors to view your property will not qualify for Gift Aid if the terms and conditions attached to an admission fee include a right to a full or partial refund of the payment. For example, in the event of bad weather, cancellation of an exhibition or mechanical failure of an exhibit.

This is because under the Gift Aid scheme a donation cannot be repaid under any circumstances.

 

Contemplating the benefits of Gift Aid to a heritage attraction led me to looking at various annual accounts. The Tramway Museum at Crich for example offers the 12 month free return visits and helpfully publishes results in its accounts which end on 31st March so the accounting year refers mainly to the previous year's admissions. These show for 2023 accounts (mainly 2022) visitors 60708 paying customers and 35785 free and for 2024 accounts (mainly 2023) visitors 70258 paying and 46632 free. Some paying customers will enter via discounted non gift aid admission and some free visitors are society members but these figures suggest well over half of visitors make free visits following the initial visit.

Assuming that a railway considering the 12 month free return saw a similar level of revisit the gift aid position using for simplicity a £50 fare and 10000 paying visitors with 5000 returning free would have an income of £500k directly and £125K from the gift aid totalling £625k. Using a model of a lower initial gift aid fare of say £42 with the same visitor numbers with a 50% non gift aid return visit (Tom's option 3) provides £420k directly and £105k gift aid plus 5000 times a £21 return so a total income of £420k +£105k +£105k = £630k. Obviously the mix needs actual experience to understand the proportion of repeat visits and how these may be influenced if charged rather then free but it does demonstrate that a high initial gift aided fare with subsequent free admission may earn less overall than a more nuanced approach encouraging visitors put off by the initial fare who have no expectation of benefitting from free returns.

As an aside many posters on here compare numbers whilst forgetting that visitor numbers may be shown in different ways. With a museum such as Crich a visitor s just that but attractions offering journeys often report these with a return ticket being 2 journeys. Transport operators historically report journeys or sometimes tickets sold and the complexities of split ticketing etc. make interpreting the numbers quite complex.

 

The underlying principle is that whatever you donate to a charity is treated as if it comes from your income before tax. Having donated that amount you don't pay tax on it. I am attaching a little diagram that I drew to clarify for myself how Gift Aid works for a higher rate taxpayer (assuming 20% basic rate and 40% higher rate). It shows what happens for a gross amount of £100. If you pay small monthly amounts to several charities, the annual total soon becomes significant so the reduction in your tax bill is well worth claiming.

I have done tax returns most years. One year they told me not to bother, so I asked how I was supposed to declare Gift Aid. They told me to fill in a different form to reclaim overpaid tax. The next year it was back to normal tax returns, on paper for a few years and latterly online.

 

Thankyou for that diagram - I understand the higher rate bit now!

Tom