1st December 2016

Gift aid small donation scheme

HMRC introduces simplifications to increase claim rate

In December 2016 the Small Charitable Donations and Childcare Payments Bill was enacted. It was designed to simplify and strengthen the Gift Aid Small Donations Scheme, and will come into effect at the start of the the 2017/18 tax year.

The Gift Aid Small Donation Scheme (GASDS), introduced in 2013, was originally expected to raise £100m a year but has fallen well short only delivering just over a quarter of that figure currently. With the reforms included in the bill the government estimates the amount of Gift Aid claimed by charities under the scheme will increase by £15m a year.

The scheme is intended for occasions where donors don't have time to stop and the provide details required for a gift aid declaration - such as putting money into a charity bucket. Charities are able to claim these repayments on small donations of £20 or less, up to an annual cap. However, as identified on a survey by NCVO, small charities in particular are struggling to make use of the scheme due to complex access requirements which was reflected in the scheme's usage statistics: only 29% of the number of charities projected to claim in 2014/15 did so (ref: NCVO Briefing).

This Bill removes some criteria for charities to access the Scheme, such as the requirement to have made successful gift aid claims in previous years. Also donations made by contactless payment will be covered but this hasn't been extended to cheques, text donations or online payments.

A charity's annual claim under GASDS is capped by reference to its annual claim under Gift Aid (the “matching rule”). In addition, a charity that is connected with one or more other charities has to share the annual £8,000 (increasing from the current £5,000) main allowance.

Finally, the scheme allows a charity to make an additional claim in respect of donations it has raised as part of its charitable activities in a community building such as a village hall, town hall or place of worship. The aim of these rules is to allow charities operating in a similar way but structured differently to have the same entitlement to top-up payments. For example, a charity may have several branches but registered as one charity or, alternatively, another charity may have the same structure but each branch may be registered as a separate charity.

For further information see Parliament Explanatory Notes


1st May 2019

The right tool for the job

Charities face the same regulatory pressures as commercial organisations but, in addition, must also deal with complex sector-specific reporting requirements intended to demonstrate good stewardship to supporters and regulators alike.

1st January 2019

VAT Refund Scheme

HMRC has updated VAT Notice 1001 on the VAT Refund Scheme for qualifying charities.

1st April 2016

Dividend Allowance

From 6th April 2016 the Dividend Tax Credit will be replaced by a new, tax-free, Dividend Allowance. The new Dividend Allowance means that you won't have to pay tax on the first £5,000 of your dividend income.

Sign up for our newsletter