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About the Small Charitable Donations Bill

The Small Charitable Donations Bill had its First Reading in Parliament on 21 June 2012. It 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.

At the moment, charities and CASCs can find it difficult to claim Gift Aid on donations collected in certain circumstances, for example bucket collections, where donors may be reluctant to stop and fill out Gift Aid declarations. This means that charities are currently missing out on potential income.

That is why the Government has introduced the Small Charitable Donations Bill that will enable charities and CASCs to claim Gift Aid style payments on the small cash donations they receive. The scheme is designed to allow top-up payments to charities on the donations that they cannot easily get a Gift Aid declaration on. It will complement the main Gift Aid scheme, which provides over £1 billion a year in additional income for the charitable sector.

In developing the scheme, the Government has taken steps to ensure that it operates as fairly as possible whilst overall costs of the scheme remain affordable, and also to protect against fraud.

The Government is keen that charities undertaking similar activities should not be disadvantaged because of the way they have structured themselves. To mitigate any disadvantage that could arise, there is an additional element of the scheme that enables those local charities that undertake their charitable activities in community buildings to claim further top-up payments. These charities will be eligible for top-up payments on a further £5,000 of small donations collected while undertaking their charitable activities in a “community building”.

Unfortunately, the generous nature of tax reliefs available for charitable giving means that charities and the scheme will remain vulnerable to exploitation, and there are a small minority who will look to take advantage of this. The Government is keen to make the scheme as simple and accessible as possible, but this does need to be balanced against protecting the scheme against fraud.

Therefore the Bill includes provisions to achieve this by ensuring only genuine charities can access the top-up payments available. Linking the scheme to claims made through the Gift Aid system gives vital reassurances that charities are using the scheme legitimately. So a charity will need to have a good track record of claiming Gift Aid for 3 years before being able to claim under the Gift Aid Small Donations Scheme, and will need to claim Gift Aid alongside the top-up payments to demonstrate continued good practice.

HM Revenue and Customs will be issuing guidance for charities for consultation ahead of the scheme commencing to support charities in claiming the top up payments they are entitled to.

We have listened carefully to what charities think about how the scheme will operate. Following the policy consultation on the scheme earlier this year and the more than 80 responses we received, we have made a number of changes to its design, including:

  • reducing the level of matching required between Gift Aid claims and donations under the scheme to make it easier for small charities to claim
  • simplifying the rules around how we determine whether charities are connected to one another
  • increasing the flexibility of how connected charities can share their allocation under the scheme

The Government’s response to the consultation is published on HM Revenue and Customs’ website http://www.hmrc.gov.uk/news/small-charitable-donations.htm

We welcome comments on the detail of the legislation.

Keep Track Of The Bill

The UK Parliament website has a dedicated page for each piece of legislation introduced this session.  The Small Charitable Donations Bill can be found at http://services.parliament.uk/bills/2012-13/smallcharitabledonations.html