The Charity Tax Group has called on the government to carry out a full review of Gift Aid donor benefits guidance with advice from charities.
In its response to the Treasury’s call for evidence on the rules for donor benefits, which closed on Friday, the CTG says the government should "commit to a serious review of the donor benefits guidance with the close involvement of charities and their advisers".
It says there should be a particular focus on the "in consequence" rules, which cover benefits received by donors that they might not have been given had they not made donations.
The rules allow charities, within certain limits, to give benefits to donors – such as memorabilia or invitations to social events – as a way of saying thank you.
The government’s call for evidence said many charities had difficulty understanding the donor benefit rules and avoided using them.
The Treasury said in July that the government recognised the rules were complex and was concerned they were not fit for purpose.
David Warrellow, tax manager at the National Trust, who helped the CTG compile its response, said the "in consequence" rules were difficult for charities to follow.
"It is an area where charities are having difficulty in determining where they have crossed the line," he said. "It would be useful to have more guidance, including some more practical examples."
The CTG response, which is based on feedback from a range of charities including the National Trust, Cancer Research UK, Age UK and the RNLI, also calls on the Treasury to continue talking to the voluntary sector about the rules and convene a meeting of the Charity Tax Forum Gift Aid Donor Benefits group before any proposals are progressed to a formal consultation.
It says the thresholds for donor benefits should be easy to follow and the government should consider introducing a disregard for benefits that further an organisation’s charitable objectives.
The general rules for donor benefits are: for donations of up to £100, the value of the benefit can equal 25 per cent of the donation; for those between £100 and £1,000, the value of the benefit is capped at £25; and for donations of more than £1,000, the value of the benefit can be worth 5 per cent of the donation, up to a maximum of £2,500. But there are other exceptions and special rules are in place governing their use.
As part of the review, which was announced in the Autumn Statement in December, the government is expected to publish a consultation on proposals for reform later this year.