Plans for Gift Aid Small Donations Scheme come under fire

The Charity Finance Group says an HMRC consultation on the matter should have included changes to the matching rule

Small donations: consultation on Gift Aid
Small donations: consultation on Gift Aid

The Charity Finance Group has criticised a newly launched HM Revenue & Customs consultation on changes to the Gift Aid Small Donations Scheme for failing to include changes to the matching rule.

After changes that took effect at the beginning of this month, the GASDS, which was introduced in 2013, allows charities to claim Gift Aid-like relief on up to £8,000 of small cash donations each year without paperwork for each individual claim.

The matching requirement says that charities must claim £1 in Gift Aid for every £10 claimed under the scheme.

HMRC held an earlier consultation on reforming the GASDS – the consultation closed last month and received 197 responses.

In response to that consultation, the CFG, along with a number of other organisations including the National Council for Voluntary Organisations, said the matching requirement should be scrapped and had "become a barrier and a burden for charities".

But in a second GASDS consultation, which opened today and sets out specific proposals for reforming the scheme, the government says that 91.5 per cent of charities and community amateur sports clubs claim sufficient Gift Aid to meet the matching requirement, so the matching rule is "reasonable".

After the new consultation was announced, Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: "It is disappointing that the matching rule is not up for change at present. Our survey of charities showed that this was a barrier for charities claiming the relief, and HMRC’s own figures show that thousands of charities will not be able to take full advantage of the relief as the rules stand. HMRC needs to think bigger if it wants this scheme to work effectively."

But O’Brien praised HMRC for taking on board concerns about eligibility criteria, which he called a "big simplification and improvement", and upgrading the rules to include contactless payments.

The existing eligibility rules require charities to have paid Gift Aid in two out of the previous four years or to have been registered for the system for the previous two tax years – this is called the two-year rule.

The latest consultation proposes scrapping the two-year rule and allowing charities to be eligible for the GASDS if they have claimed Gift Aid in the previous year. Other proposals include changing the rules on community buildings, which cover national organisations that run out of multiple buildings such as denominations of churches – it is claimed this would make them fairer for all charities by allowing claims either under the GASDS or the community buildings allowance, but not both.

The full consultation can be viewed on the HMRC website and closes on 1 July.

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