01 June 2016

HMRC launches consultation into Gift Aid Small Donations Scheme

Alison Paines
Partner | UK

Following a call for evidence in December, HMRC has launched a consultation into the Gift Aid Small Donations Scheme (the 'scheme'). The consultation closes on 1 July 2016.

The Government considers that charities are generally happy with the scheme but, in order to encourage the use of the scheme, particularly amongst small charities, the Government proposes to simplify the rules of the scheme. The proposals are:

  • Removing the current requirement that charities must have been registered for Gift Aid for at least two years before it can use the scheme. This would make it easier for new or smaller organisations to join the scheme.
  • Reducing the number of successful Gift Aid claims needed from one in two of the four previous tax years, to just one in the last tax year.
  • Extending the scheme to cover contactless credit and debit card payments.
  • Relaxing the community building rules so that donations received outside of the building (eg a community centre or place of worship) could be included.
  • Preventing charities from submitting claims under either the main scheme rules or under the community building rules, not both. The Government considers that this will be fairer amongst different charities.

The Charity Tax Group, NCVO and other organisations had argued that the 'matching rule' should be abolished – this is where charities must claim £1 in Gift Aid for every £10 claimed under the scheme. The Government considers that, as 91.5% of charities and community amateur sports clubs claim sufficient Gift Aid to meet the requirements, the rule is reasonable.

The Government does not propose to extend the definition of 'small cash payment' to above £20 or allow the scheme to cover donations by text, cheque or direct debit.

The full consultation document is available here and the consultation is open until 1 July 2016.

Alison Paines Partner | London, Cambridge

Category: Article

Client types: Charities and non-profit