04 December 2017

Gift Aid Donor Benefit Rules 'made simple'

In the recent Budget the government announced a simplification of the donor benefit rules applicable to Gift Aid payments. This represents the culmination of detailed public consultation into the rules and allows greater reciprocal generosity from charities to their donors in some circumstances.

The current Gift Aid rules allow charities to provide a benefit to a donor up to a 'relevant value', which is calculated according to the size of their donation and subject to an overall cap of £2,500. If the benefit received exceeds the 'relevant value' or the cap then the donation will not qualify for Gift Aid. Charities can also benefit from a number of extra-statutory concessions to the 'relevant value' limits.

At present the 'relevant value' is determined within three thresholds:
• for donations up to £100, 25% of the donation;
• for donations between £100 and £1,000, a fixed value of £25; and
• for donations over £1,000, 5% of the donation.

The revised rules provide for two thresholds:
• for donations up to £100, this is still 25% of the donation; but
• for donations above £100 and below the overall cap of £2,500, this will be £25 plus 5% of the value above £100.

The effect of the rules will therefore remain the same for donations of up to £100. However for donations between £100 and £1,000 donors can now receive benefits more in line with the scale of their donations, instead of a fixed threshold of £25.

These changes and the legislation of four existing extra-statutory concessions will be introduced in the Finance Bill 2018-19 and will take effect 'on and after 6 April 2019'.

Category: Article