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Public Reading Stage

The Small Charitable Donations Bill

The Small Charitable Donations Bill will introduce a new scheme that will enable charities to claim Gift Aid style payments on the small donations they receive where it is difficult to get a Gift Aid declaration.

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How you can influence this policy

The Small Charitable Donations Bill

The Small Charitable Donations Bill will introduce the Gift Aid Small Donations Scheme (GASDS) – a new scheme that will enable charities and community amateur sports clubs (CASCs) to claim Gift Aid style payments on the small donations they receive where it is difficult to get a Gift Aid declaration.

Charities and CASCs will be able to claim a top up payment on small donations of up to £20, up to a total of £5,000 of small donations per year, so qualifying charities and CASCs will be able to claim up to £1,250 in payments each year. It is estimated that this scheme, announced at Budget 2011, will lead to an extra £100 million a year in Government funding for charities by 2015-16. The scheme will commence in April 2013.

Download the Small Charitable Donations Bill

Bill text

Intr.A BILL TO

Provide for the making of payments to certain charities and clubs in respect of certain gifts made to them by individuals; and for connected purposes.

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

1Top-up payments

Top-up payments in respect of small donations made to eligible charities

1 (1)A charity is entitled to a payment from HMRC (a "top-up payment") if—
(a) the charity is an eligible charity for a tax year
(b)the charity has made a successful gift aid exemption claim in respect of gifts made to it in the tax year,
(c) small donations are made to the charity in the tax year, and
(d) the charity makes a claim in respect of small donations made to it in the tax year.

1 (2)The amount of the top-up payment is—
SD x R / 100 - R
where—
SD is the amount of the small donations to which the claim relates, and R is the percentage rate of the basic rate of income tax for the tax year in question.

1 (3)A charity is not entitled to top-up payments in respect of small donations made to it in a tax year in excess of the maximum donations limit for the charity for the tax year.

1 (4)The "maximum donations limit" for a charity for a tax year is—
(a) an amount equal to double the gift aid donations amount for the charity for the tax year, or
(b) if less, the specified amount for the charity for the tax year.

1 (5)The "gift aid donations amount" for a charity for a tax year is the amount of the gifts made to the charity in the tax year and in respect of which it has made successful gift aid exemption claims.

1 (6)The "specified amount" for a charity for a tax year is £5,000.

1 (7)This section is subject to sections 4, 6 and 9 (connected charities and charities running charitable activities in community buildings).

2Meaning of "eligible charity"

2 (1)A charity is an eligible charity for a tax year if—
(a) it has made a successful gift aid exemption claim in at least 3 of the previous 7 tax years, and
(b) the charity's start-up period expired before that year.

2 (2)If a charity did not make any successful gift aid exemption claims in a period of 3 consecutive tax years, any claim made in an earlier tax year is to be disregarded for the purposes of subsection (1)(a).

2 (3)A charity on which a penalty has been imposed in connection with a gift aid exemption claim or top-up claim made by the charity is not an eligible charity—
(a) for the tax year in which the claim was made, or
(b) for the next 2 tax years,
(even if the penalty was imposed after the tax year in which the claim was made).

2 (4)For the purposes of this section—
(a) a charity's start-up period" is the first period of 3 consecutive tax years during which it is, at all times, a charity (as defined by section 17(1));
(b) "penalty" means a penalty under—
(i) Schedule 24 to the Finance Act 2007, or
(ii) regulations under section 11.

3Meaning of "small donation"

3 (1)In this Act "small donation" means a gift made to a charity by an individual in relation to which each of the conditions in the Schedule is met (but does not include a membership fee).

3 (2)But if a small donation made to a charity is applied to purposes other than charitable purposes, or any part of the donation is applied to purposes other than charitable purposes, the donation or part is to be treated as if it were not a small donation.

3 (3)Subsection (2) does not apply to -
(a) the Trustees of the National Heritage Memorial Fund;
(b) the Historic Buildings and Monuments Commission for England;
(c) the Trustees of the British Museum;
(d) the Trustees of the Natural History Museum.

4Connected charities and community buildings

Connected charities

4 (1)This section applies if two or more charities—
(a) are connected with one another in a tax year, and
(b) are eligible charities for the tax year.

4 (2)Section 1 applies to each of the charities in relation to the tax year as if references to small donations made to a charity included small donations made to any of the charities.

4 (3)The specified amount for the purposes of section 1(4) for each of the charities for the tax year is an amount equal to—
(a) £5,000, divided by
(b) the number of the charities which make a top-up claim in respect of small donations made in the tax year.

4 (4)This section does not apply if any of the charities runs charitable activities in a community building in the tax year (as to which see section 9).

5Meaning of "connected"

5 (1)For the purposes of this Act a charity is connected with another charity in a tax year if it is connected with that other charity at any time in the tax year (as to which see subsections (3) to (5)).

5 (2)If—
(a) a charity ("charity A") is connected with another charity ("charity B") (including by virtue of this subsection) in a tax year, and
(b) charity B is connected with a further charity ("charity C") in the tax year,
charity A and charity C are also connected with each other in the tax year for the purposes of this Act.

5 (3)Section 993 of the Income Tax Act 2007 applies for determining whether a charity is connected with another charity at any time for the purposes of this section.

5 (4)In the application of section 993 for this purpose, "company" includes a charity that is a trust and a person has "control" of such a charity if—
(a) the person is a trustee of the charity,
(b) the person has power to appoint or remove a trustee of the charity, or
(c) the person has any power of approval or direction in relation to the carrying out by the trustees of any of their functions.

5 (5)But a charity is not to be regarded as connected with another charity at a time for the purposes of subsection (1) unless, at that time, the purposes and activities of the charities are the same or substantially similar.

6Charities running charitable activities in community buildings

6 (1)This section determines the specified amount for the purposes of section 1(4) for a charity that runs charitable activities in one or more community buildings in a tax year (see sections 7 and 8 for the meaning of certain terms used in this section).

6 (2)The specified amount for the charity for the tax year is an amount equal to—
(a) the sum of the amounts which, for each community building in which the charitable activities are run, is the community building amount, plus
(b) the remaining amount.

6 (3)The "community building amount", in relation to a community building, means—
(a) the sum of the small donations that are made to the charity in the community building in the tax year while it is running charitable activities in the building, or
(b) if less, £5,000.

6 (4)The "remaining amount" means—
(a) the sum of the remaining donations made to the charity in the tax year,
or
(b) if less, £5,000.

6 (5)"Remaining donations", in relation to a charity and a tax year, means the small donations made to the charity in the tax year other than any made to it in community buildings in the tax year while it is running charitable activities in the buildings.

6 (6)Section 9 modifies this section as it applies to a charity that is connected with another eligible charity.

7Meaning of "running charitable activities in a community building" etc

7 (1)For the purposes of this Act a charity "runs" charitable activities in a community building in a tax year if it carries out charitable activities with a group of 10 or more people in the building on 6 or more occasions in the tax year (and references to donations made to a charity "while" it is running charitable activities in a community building are to be construed accordingly).

7 (2)For this purpose—
(a) the reference to a group of 10 or more people does not include staff of the charity;
(b) the people forming the group need not be the same on any two of the occasions.

7 (3)"Staff" in relation to a charity, means—
(a) a volunteer working for the charity who is not in the class of persons for whose benefit the charitable activities are being carried out,
(b) persons employed by or otherwise working for the charity (other than volunteers), and
(c) any officers or trustees of the charity.

7 (4)HMRC may by order amend the numbers for the time being specified in subsections (1) and (2)(a).

7 (5)In this Act "charitable activity" means an activity carried out for a charitable purpose, other than primarily for the purpose of fund-raising.

7 (6)In this Act a reference to a "charity" that runs charitable activities does not include a registered club within the meaning of Chapter 9 of Part 13 of the Corporation Tax Act 2010 that runs such activities.

8Meaning of "community building"

8 (1)In this Act community building"—
(a) means a building (such as a village hall, town hall or place of worship), or those parts of it, to which the public or a section of the public have access at some or all times, but
(b) does not include a building, or any parts of it, used wholly or mainly
for commercial or residential purposes.

8 (2)Where a person holds a freehold or leasehold interest in land, any two or more buildings on the land, or on any adjoining land in which the person holds such an interest, are to be treated as a single building for the purposes of this Act.

8 (3)HMRC may by order—
(a) provide for cases in which a building, or part of it, is or is not to be treated as a community building or as part of a community building for
the purposes of this Act;
(b) provide for cases in which 2 or more buildings in the same vicinity are to be treated as a single building for the purposes of this Act.

8 (4)Provision under subsection (3) may be framed by reference to a description of building, the use to which it is put or any other circumstances; and the provision may be framed so as to apply at all times or at certain times only.

8 (5)In the application of this section to Scotland—
(a) a reference to a freehold interest in land is to the interest of the owner, and
(b) a reference to a leasehold interest in land is to a tenant's right over or
interest in a property subject to a lease.

9Connected charities and community buildings

9 (1)This section applies if—
(a) two or more charities (connected eligible charities") are connected with one another in a tax year and are eligible charities for the tax year,
and
(b) one or more of them runs charitable activities in a community building in the tax year.

9 (2)Section 1 applies to each of the charities in relation to the tax year as if references to small donations made to a charity included remaining donations made to any of the charities.

9 (3)In relation to any of the charities that does not run charitable activities in a community building in the tax year, the specified amount for the purposes of section 1(4) for the charity for the tax year is an amount equal to—
(a) the capped total of remaining donations, divided by
(b) the number of the connected eligible charities which make a top-up
claim in respect of small donations made in the tax year.

9 (4)In subsection (3) "the capped total of remaining donations" means—
(a) the sum of the remaining donations made to each of the connected eligible charities in the tax year, or
(b) if less, £5,000.

9 (5)But for the purposes of subsection (3), a charity that runs charitable activities in a community building in the tax year is to be treated as not having made a top-up claim in respect of small donations made in the tax year unless—
(a) its total claimed amount for the year, exceeds
(b) its community buildings amount for the year.

9 (6)In subsection (5)—
 "total claimed amount for the year" means the sum of the small donations made to the charity in the tax year and in respect of which it has made successful top-up claims;
 "community buildings amount for the year" means the amount that
would be the specified amount for the charity for the tax year under section 6 if the charity's remaining amount for that year were nil.

9 (7)In relation to any of the charities that runs charitable activities in a community building in the tax year, section 6 applies as if the charity's remaining amount were the specified amount given by subsection (3).

9 (8)Remaining donations has the meaning given by section 6(5).

10Overpayments and administration

Overpayments

If—
(a) an amount is paid to a charity under section 1, and
(b) the charity was not, or has ceased to be, entitled to it (because of section 2(3), 3(2), 4 or 9, or otherwise),
the amount must be repaid to HMRC.

11Management of top-up payments

11 (1)Matters relating to top-up payments are to be under the management of HMRC.

11 (2)HMRC may by regulations make provision—
(a) about the administration of top-up payments;
(b) otherwise for the purposes of fully implementing this Act.

11 (3)Regulations under subsection (2) may in particular—
(a) make provision in relation to top-up claims applying or incorporating,
with or without modifications, any enactment that applies in relation to gift aid exemption claims;
(b) make provision in relation to top-up payments applying or incorporating, with or without modifications, any enactment that applies in relation to repayments of income tax treated as having been
paid;
(c) make provision in relation to overpayments applying or incorporating, with or without modifications, any enactment that applies in relation to amounts of income tax or corporation tax which are due and payable;
(d) make other provision applying or incorporating, with or without modifications, any enactment relating to the collection or management of income tax or corporation tax;
(e) make provision postponing the determination of a top-up claim in prescribed circumstances.

11 (4)The enactments mentioned in subsection (3) include, in particular, enactments—
(a) providing for the payment of interest;
(b) requiring the provision of information;
(c) conferring a power of entry onto land;
(d) providing for the imposition of a civil penalty;
(e) creating a criminal offence (including, in particular, offences relating to the provision of false or misleading information or failure to provide information);
(f) providing for enforcement of sums owed (whether by action on a debt, 15 by distraint against goods or in any other way);
(g) providing for appeals.

11 (5)A power conferred by subsection (3) to apply or incorporate a provision creating an offence does not include power to increase the level of any punishment for which a person may be liable on conviction for the offence.

11 (6)A power conferred by subsection (3) to apply or incorporate a provision imposing a civil penalty does not include power to increase the maximum amount of the penalty.

11 (7)In subsection (3) "enactment" includes—
(a) a provision of an Act passed after the day on which this Act is passed, and
(b) a provision made, or that may be made, under an enactment.

11 (8)In subsection (3)(c) "overpayment" means an amount to which section 10 applies.

11 (9)An amount calculated for the purposes of any provision of this Act is to be rounded to the nearest whole penny, taking 0.5p as nearest to the next whole penny.

12Miscellaneous

Change of charity's legal form

12 (1)Subsection (2) applies if—
(a) a charity (the old charity") is dissolved and another charity ("the new charity") is created,
(b) the new charity takes a different legal form to the old charity, and
(c) on an application made by the new charity, HMRC certify that, in their opinion, the new charity is otherwise substantially the same charity as the old charity.

12 (2)This Act and any relevant provisions apply as if—
(a) things done (or treated, by virtue of this section, as having been done) by or in relation to the old charity had been done by or in relation to the new charity;
(b) the new charity had been created when the old charity was created (or is treated, by virtue of this section, as having been created).

12 (3)In subsection (2) "relevant provision" means a provision of regulations under section 11 designated by regulations under that section as a relevant provision for the purposes of this section.

12 (4)In deciding whether to issue a certificate, HMRC must have regard in particular to—
(a) the purposes of each of the charities,
(b) the control and management of each of the charities, and
(c) the extent to which the property of the old charity has been transferred to the new charity.

12 (5)HMRC must issue such guidance as they consider appropriate about the exercise of their functions under this section.

12 (6)Regulations under section 11 may in particular make provision—
(a) about the form and contents of applications under this section;
(b) requiring an application to be made no later than a prescribed period
after the dissolution of the old charity;
(c) for appeals against a refusal to issue a certificate under this section.

13Power to alter specified amount etc

13 (1)The Treasury may by order amend—
(a) section 1(6) (the specified amount),
(b) section 4(3)(a),
(c) section 6(3)(b) and (4)(b), and
(d) section 9(4)(b),
by substituting a different sum for the sum for the time being specified in each of those provisions.

13 (2)The Treasury may by order amend paragraph 1(1) and (2) of the Schedule (limit on value of individual donations) by substituting a different sum for the
sum for the time being specified in each of those provisions.

14Top-up payments not taxable

A top-up payment is not to be treated as income for any purpose of the Tax Acts.

15General
Northern Ireland
In Schedule 2 to the Northern Ireland Act 1998 (excepted matters), before paragraph 10 insert—
"9C The operation of the Small Charitable Donations Act 2012."

16Regulations and orders

16 (1)Regulations and orders under this Act are to be made by statutory instrument.

16 (2)A statutory instrument containing regulations or an order under the preceding provisions of this Act may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

16 (3)Regulations and orders under this Act—
(a) may apply generally or only in specified cases or circumstances;
(b) may make different provision for different cases or circumstances;
(c) may make consequential, supplementary, incidental, transitional or
saving provision.

17General interpretation

17 (1)In this Act "charity" means—
(a) a charity within the meaning of Part 1 of Schedule 6 to the Finance Act 2010;
(b) the Trustees of the National Heritage Memorial Fund;
(c) the Historic Buildings and Monuments Commission for England;
(d) a registered club within the meaning of Chapter 9 of Part 13 of the Corporation Tax Act 2010 (community amateur sports clubs).

17 (2)In this Act—
"charitable activity" has the meaning given by section 7; "charitable purpose"—
(a) in the case of a charity within subsection (1)(a) to (c), has the meaning given by section 2(1) of the Charities Act 2011 (reading the reference in section 2(1) to the law of England and Wales as including a reference to the law of Scotland and the law of Northern Ireland);
(b) in the case of a charity within subsection (1)(d), means qualifying purpose within the meaning given by section 661(3) of the Corporation Tax Act 2010;
"community building" is to be read in accordance with section 8;
"connected charities": references to a charity being connected with another charity in a tax year are to be read in accordance with section 5;
"eligible charity" is to be read in accordance with section 2;
"gift aid exemption claim" means a claim for amounts to be exempt from income tax or corporation tax by virtue of—
(a) section 521(4) of the Income Tax Act 2007, or
(b) section 472, 475 or 664 of the Corporation Tax Act 2010,
(and for related expressions see subsection (3) below);
"HMRC" means the Commissioners for Her Majesty’s Revenue and Customs;
"running charitable activities in a community building": references to a charity running charitable activities in a community building in a tax year are to be read in accordance with section 7;
"small donation" is to be read in accordance with section 3;
"tax year" means a year beginning on 6 April and ending on the following 5 April;
"top-up claim" means a claim under section 1 (and for related expressions see subsection (3) below);
"top-up payment" has the meaning given by section 1.

17 (3)For the purposes of this Act—
(a) a gift aid exemption claim is "successful" if an amount falls to be
exempt from income tax or corporation tax as a result of the claim;
(b) a successful gift aid exemption claim is made in respect of a gift to the extent that the gift, or the grossed up amount of the gift, falls to be exempt from income tax or corporation tax as a result of the claim;
(c) a successful top-up claim is made in respect of small donations if, and 10 to the extent that, a top-up payment falls to be made because of the
claim (and does not fall to be repaid under section 10);
(d) in determining whether a successful claim has been made in a tax year, it does not matter when the claim is determined.

17 (4)In this Act a reference to the making of a claim by a charity includes a reference to the making of a claim on behalf of the charity.

18Financial provisions

There is to be paid out of money provided by Parliament any increase attributable to this Act in the sums payable under any other Act out of money so provided.

19Extent

This Act extends to—
(a) England and Wales,
(b) Scotland, and
(c) Northern Ireland.

20Commencement and transitional provision

20 (1)This Act comes into force on 6 April 2013, subject to subsections (2) and (3).

20 (2)Any provision of this Act that confers a power to make regulations or an order comes into force, for the purposes of the use of the power, on the day on which this Act is passed.

20 (3)The following provisions of this Act come into force on that day—
(a) sections 15 to 19;
(b) this section;
(c) section 21.

20 (4)In section 2 the references to claims having been made, or penalties having been imposed, include claims made, or penalties imposed, before the date on which that section comes into force.

20 (5)In applying section 2 by virtue of subsection (4)—
(a) the reference in section 2(4)(b) to Schedule 24 to the Finance Act 2007
includes a reference to any enactment omitted by paragraph 29 of that Schedule;
(b) any reference in the definition of "gift aid exemption claim" in section 17(2) to a provision of the Income Tax Act 2007 or the Corporation Tax Act 2010 includes a reference to any corresponding earlier enactment rewritten in that provision.

20 (6)The Treasury may by order make other transitional provision in connection with the coming into force of any provision of this Act.

21Short title

This Act may be cited as the Small Charitable Donations Act 2012.

Sch. p1SCHEDULE (Section 3)

MEANING OF "SMALL DONATION": CONDITIONS

Sch. p1 (1)Small cash payment

The gift must be £20 or less in cash.

Sch. p1 (2)Where a gift of cash is made to the charity and its managers do not know whether the gift is £20 or less, the condition in sub-paragraph (1) is to be treated as met if the managers have taken reasonable steps to find out.

Sch. p1 (3)In this paragraph—
"cash" means coins and notes in any currency;
"managers", in relation to a charity, means the persons having the
general control and management of the administration of the charity.

Sch. p2Collected in the United Kingdom

The gift must be received in the United Kingdom by or on behalf of the charity.

Sch. p3Deposited in United Kingdom in a bank account

Sch. p3 (1)The cash given to the charity must have been deposited in an account kept by or on behalf of the charity at a relevant institution and the deposit must have been made in the United Kingdom.

Sch. p3 (2)"Relevant institution" has the meaning given by section 109(3) of the Charities Act 2011.

Sch. p4Not eligible for gift aid

Sch. p4 (1)The gift must be one in relation to which no gift aid declaration is given to the charity.

Sch. p4 (2)"Gift aid declaration" means a declaration which is a gift aid declaration for the purposes of Chapter 2 of Part 8 of the Income Tax Act 2007.

Sch. p5Not payment under payroll deduction scheme

The gift must not be a sum falling within section 713(3) of the Income Tax (Earnings and Pensions) Act 2003 (payroll deduction scheme).

Sch. p6Not deductible in calculating income

The gift must not be deductible in calculating the individual's income from any source for the purposes of income tax.

Sch. p7Not subject to condition as to repayment

The gift must not be subject to any condition as to repayment.

Sch. p8Not conditional on acquisition of property by charity

Sch. p8 (1)The gift must not be conditional on, associated with or part of an arrangement involving, the acquisition of property by the charity from the individual or a person connected with the individual.

Sch. p8 (2)An acquisition by way of gift is to be ignored for the purposes of this condition.

Sch. p9No, or only negligible, benefits associated with gift

Sch. p9 (1)There must be no benefits associated with the gift, or any benefits associated with the gift must be of negligible value (for example, a lapel sticker designed to acknowledge the making of a gift).

Sch. p9 (2)For this purpose a benefit is associated with a gift if it is received by the individual who makes the gift, or a person connected with the individual, in consequence of making the gift.

Sch. p10Interpretation

For the purposes of this Schedule whether a person is connected with another person is to be determined in accordance with section 993 of the Income Tax Act 2007.

14 comments

NCVO Policy team, NCVO: NCVO strongly objects to this ‘matching’ requirement in the Small Charitable Donations Bill.

We understand that HMRC wish to reduce fraud risks by requiring organisations to have a track record of successful Gift Aid claims. However, Clause 1(4) proposes to further restrict the level of Small Donations claims that can be made by a charity on the basis of a 2-1 match with their Gift Aid claims.

This means that in order to claim the maximum amount under the GASDS (up to £1250 on maximum of £5000 small donations), a charity would need to have made Gift Aid claims of at least £625. It is unclear how requiring charities to have claimed a certain monetary value through Gift Aid – in addition to having a good track record - would improve the scheme or reduce fraud risks.

As it stands, Clause 1(4) unnecessarily complicates the Scheme and will disadvantage some charities. There will be charities that have not raised enough through Gift Aid to entitle them to claim the full amount under the new Small Donations Scheme. These charities may not often get the types or size of donations where they can realistically collect Gift Aid declarations – for example, if they use a collecting tin. These charities could benefit greatly from this new Scheme, but could find themselves at a disadvantage due to the matching ratio.

NCVO would recommend dropping this clause.
125 days ago Report this comment

CAF Policy Team, Charities Aid Foundation: CAF views the inclusion of a Gift Aid matching requirement as a real problem. We appreciate the desire of HMRC to minimise the risk of abuse of the system, but feel that this stipulation will disproportionately penalise precisely those small organisations that the new Small Donations Scheme should be of most benefit to.

The stated policy aim of the Gift Aid Small Donations Scheme is to enable Gift Aid-style payments on donations where it is currently not practical to collect Gift Aid declarations. However, if there is a matching requirement, this means that a small charity will only be able to benefit from the scheme if they also get sufficient donations of a sort that can be Gift Aided in the usual way. For very small charities that rely on cash collections this may not be practical.

It is also unclear why a matching requirement is needed above and beyond the requirement for an organisation to have a 3 year record of making Gift Aid claims, as we feel that this (although arguably problematic itself) should offer sufficient protection against abuse.
123 days ago Report this comment

CFG policy team, CFG policy team: CFG strongly recommend removing this clause from the Bill. ‘Matching’ the maximum amount that can be claimed with a proportion (proposed as 2:1) of the amount claimed in Gift Aid in a given year, is seen as a way of mitigating fraud. This is because the link with Gift Aid provides a greater degree of administrative record-keeping and is seen as indicating a recent track record of compliance. However, the amount claimed in Gift Aid is fairly arbitrary as an indicator of this and presents a significant burden on top of other eligibility criteria that have been designed for this purpose (see section 2 of the Bill).

This is a further complication that will stop some charities from being able to claim on a yearly basis for reasons dependent on the number of Gift Aid donations they have received. This represents an unfair disadvantage for small organisations that receive very few donations suitable for Gift Aid by limiting when and how much they can claim under this scheme.

Not only will charities be required to assess their eligibility and to ensure that they keep within the maximum limit of £5000 in donations; they will also need to look at the amount of Gift Aid they have claimed and double this. We believe that this will be highly complex for many small organisations and there could be a high risk of over or under-claiming.
123 days ago Report this comment

Policy Team, Institute of Fundraising: This clause limits the amount on which a top-up payment may be claimed to twice the amount the charity claims in standard Gift Aid for the same tax year. For example, a charity that has received over £5,000 in donations from public collections but may only have received £100 in standard Gift Aid income with a declaration will only be eligible to make a claim on £200 instead of £5,000.

This clause may exclude a large number of small charities who do not have eligible standard Gift Aid donations from participating in the scheme – for example, charities who receive the majority of their income from trust and foundation sources and from public collections. They will be unable to claim the top-up on their relevant public collections as they have no or limited eligible standard Gift Aid donations in order to match their public collections income with. Even if they could potentially have some eligible donations (eg a couple of trustees making donations of £20 each with a declaration) the level of Gift Aid that they would receive from these donations and the top-up would not be enough of an incentive to justify the administration and participate in the scheme – despite the fact that they may have significant income in small donations which would otherwise be eligible for the scheme.

We believe this matching requirement should be removed as it limits the potential of the scheme. Requiring a level of declarations is not in the spirit of the policy intentions which were to allow a Gift Aid style payment in circumstances where it is difficult to obtain a Gift Aid declaration.
118 days ago Report this comment

Natasha Parker, Consultant and charity trustee: I agree with the comments above from the Institute of Fundraising. It is not clear why there is a requirement to have non-collections income in order to be able to claim a grant that is linked to collections. This doesn't seem to fit the policy intention and should be removed.
117 days ago Report this comment

David J Israel, Member of Institue of Fundraising, long time fundraiser: The difficulties with this clause link closely to those in clause 2(1).

My hope is that the Government is seeking to put more money in the hands of charities to help them do their exceptional work.

Aside from the good Keynsian economics this presents, it will also help a great deal in times of public and third sector austerity. Helping more charities claim more Gift Aid will, of course, 'cost' the Government more.

However, I believe it will also help Government better deliver on its services through charities by increasing their cashflow.
117 days ago Report this comment

Cath Lee, CEO, Small Charities Coalition: Small Charities Coalition is against the ‘matching’ of the maximum donations limit at any level and recommend that this clause is removed.

This will adversely affect three categories of small charity:
- Start up charities – many charities start with cash forms of fundraising that are not eligible for gift aid. They therefore are unlikely to be able to ‘match’ donations to a degree to make participation attractive and yet they are the type and size of charity that would particularly benefit from the top up payment. A small increase in income makes a big difference if you are a charity with a few thousand pounds income.
- Charities that rely on other forms of non gift aidable income such as grants.
- Charities that feel unable to take advantage of the gift aid system due to the administrative requirements. Perceptions that Gift Aid is complex to understand and administer still remain along with a ‘fear’ of getting it wrong. The need to monitor more closely the level of gift aid and link it with the amount claimed within a particular tax year for small donations is likely to exacerbate these perceptions.
110 days ago Report this comment

Alan Gosschalk, charity fundraiser: I completely agree with what the Institute of Fundraising say above
106 days ago Report this comment

James Jopling, Charity fundraiser: I agree with the recommendation of the Institute of Fundraising
106 days ago Report this comment

Stef Cormack, Member of public (and charity senior manager): I agree with the comments from the Institute of Fundraising above
105 days ago Report this comment

Louise Wright, Charity CEO: I agree with the comments from the Institute of Fundraising above
105 days ago Report this comment

John Turner, Charity Chair and Fundraiser: The clause about having to already be claiming Gift Aid will preclude most small organisations from claiming. The whole point of this legislation should be to help small organisations who fall outside of the current Gift Aid scheme, however if this clause stays in then, because thay fall outside the Gift Aid scheme, they will not be able to claim on the new one (catch 22 eat your heart out!)
105 days ago Report this comment

Hospital Broadcasting Association: HBA objects to the "matching" requirement in the Bill, which restricts eligible claims to a maximum of twice that claimed in the same financial year under the Gift Aid scheme. HBA is concerned that this will severely reduce the number of our members (and other small charities) that are eligible to claim.

Many of our members do not receive sufficient donations that are eligible for Gift Aid to justify the administrative burden of registering under the Gift Aid scheme and making claims on a regular basis – these are small charities that, in many cases, rely almost entirely on fundraising events such as "tin shakes" in the town centre or at the local supermarket for the funding of their day-to-day activities. Under the proposed eligibility rules, these charities will be discriminated against simply because they do not conform to what HMRC considers to be "the norm" when it comes to charity fundraising.

In the survey of our members, of those that are registered for Gift Aid, or have considered registering, the reason stated most often (by a long way) for not claiming (or not registering to claim) is that the administrative burden of doing so far outweighs the monetary value of any Gift Aid reclaim that they would receive. Those that do make Gift Aid reclaims on average claim only around £160 per year.

Our survey suggests that our members would claim, on average, less that £500 under the Small Donations Scheme even if there was no matching requirement. Given the relatively small amounts of money involved, HBA feels that the restrictions imposed for counter-fraud reasons are disproportionate and will simply rule ineligible the vast majority of our members. As stated above, our survey suggests 70% of our members would be ineligible to claim, and only 27% of small charitable donations to our members would be eligible under the scheme as set out in the Bill today.

HMRC make Gift Aid repayments totalling approximately £1bn per annum, and detect around £10m per annum of fraudulent claims (figure from answer to FOI request submitted by HBA July 2012) – a rate of fraud of around 1%. HMRC estimate that £60m will be paid to charities under the Small Donations Scheme in 2013/14, raising to £125m in 2016/17 (figures from Impact Assessment). HMRC are concerned that the level of fraud against the Small Donations Scheme will be significantly higher than that against Gift Aid. Even if the level of fraud was five times as high as is the case of Gift Aid (5%), the amount fraudulently obtained would only be £3m (2013/14) to £6m (2016/17). Whilst any level of fraud must be taken seriously, the figures need to be compared against the amount of tax lost elsewhere, and against the amount of legitimate claims that are ruled ineligible by these counter-fraud rules.

HMRC's own statistics on the "tax gap" ("Measuring Tax Gaps 2011") provide an interesting comparison. Overall, in 2009/10 (the last year for which figures are available), the estimated difference between tax due and that collected was £35bn, or 8% of total tax revenue. For small and medium enterprises, in 2006 the estimated shortfall in corporation tax payments was £1.4bn, or 10% of estimated liabilities. Overall therefore, the charity sector, as one might expect, does not appear to be a high-risk area when it comes to tax fraud or evasion.

If HBA's survey results are in any way representative, 73% of small charitable donations would be ineligible for a claim under the proposed scheme. When you take into account the absolute monetary amounts that we are talking about here, and the impact those amounts of money would have respectively on HM Government and on small charities, the impact of the imposition of these counter-fraud measures seems grossly disproportionate.
105 days ago Report this comment

The Scout Association: TSA agreea with the comments made by the Institute of Fundraising above. Due to the nature of fundraising undertaken by our 7,000 Scout Groups, many may have low year-on-year standard Gift Aid claims but then in some years will have total small donations that may dwarf this sum. Groups often rely on small donations and collections for a one-off activities or larger projects that do not form part of their weekly Scout activities such as renovating community facilities, buying new equipment to support or fundraising for an expedition abroad. Including this clause will be detrimental to many of our local Scout Groups and will limit their ability to claim Gift Aid on much needed funds for specific activities.
104 days ago Report this comment