The government has today published the Small Charitable Donations Bill which “provides for the making of payments to certain charities and clubs in respect of certain gifts made to them by individuals; and for connected purposes”. In other words it introduces the Gift Aid Small Donations Scheme (GASDS) which was announced in the 2011.
This enables charities and Community Amateur Sports Clubs (CASCs) to claim a Gift Aid style payment on small cash donations up to £20 “where it is often difficult to obtain a Gift Aid declaration”. Eligible organisations throughout the UK will be able to claim top-up payments on up to £5,000 in small cash donations each year. Cheques, online donations and other methods of giving do not qualify.
Technically the GASDS is not part of the Gift Aid system, but it will be administered “in the same way as Gift Aid”. Instead the top up payment is a grant from public expenditure and not a tax relief.
Chloe Smith, Economic Secretary to the Treasury, said: “The Gift Aid Small Donations Scheme will boost the income of charities, unlocking around £100m more funding for charities a year by 2015-16.”
Charity Tax Group’s response
The government has consulted on the new scheme and the Charity Tax Group (CTG) has noted two positive amendments as a result. It welcomed the proposed change from a 1:1 match with Gift Aid claimed to 2:1 (ie the charity needs to have claimed 50% of the amount claimed under the scheme rather than the 100% originally planned).
It also welcomed the fact that the Bill makes it clear that one charity is not to be regarded as connected with another charity unless the purposes and activities of the two charities are the same or substantially similar.
CTG Chairman, John Hemming said. “We welcome the publication of this Bill which gives charities the chance to receive a ‘Gift Aid style’ payment on small cash donations that would otherwise be outside the Gift Aid system. Although the legislation is more complex than the sector had hoped, it reflects HMRC’s efforts to accommodate charities in the scheme irrespective of how they are structured.
“CTG welcomes HMRC’s willingness to adapt the scheme based on feedback from the sector and looks forward to continued engagement on the scheme following its implementation”.
Charities Aid Foundation’s response
Charities Aid Foundation (CAF) was disappointed that the government had not taken the opportunity to simplify Gift Aid legislation.
CAF Head of Policy Hannah Terrey said: “It is good that the Government recognises that Gift Aid is too complicated, but the proposals it has published today are far too complex and unlikely to have a major impact on charity fundraising, particularly for small charities.
“The current Gift Aid scheme is outdated and needs to be simplified for donors and charities. We need a complete overhaul of Gift Aid to ensure it is fit for fundraising in the age of the Internet and the smartphone. We think a single Gift Aid registration scheme, based online, would cut form-filling and increase charities’ incomes by hundreds of millions a year.”
What happens next?
HMRC will publish draft ./guidance for the scheme for consultation in the autumn. Charities will be able to claim the Gift Aid-style top-up payments from HM Revenue and Customs (HMRC) from April 2013.
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