Small donations scheme changes 'could bring in £15m a year extra'

During a debate on the Small Charitable Donations and Childcare Payments Bill, minister Rob Wilson says changes it would introduce would increase uptake of the Gift Aid Small Donations Scheme

Small donations: uptake less than expected
Small donations: uptake less than expected

Changes to the Gift Aid Small Donations Scheme could boost payments to charities by an estimated £15m a year, MPs have been told.

During a debate in the House of Commons on the the Small Charitable Donations and Childcare Payments Bill yesterday, Rob Wilson, the Minister for Civil Society, told MPs that provisional estimates from HM Revenue & Customs indicated that changes introduced by the bill would increase uptake.

The bill, which was introduced in the House of Commons last month, proposes changes to the scheme that include the removal of the two-year rule, under which charities must have been registered for at least the past two years before accessing the scheme.

The bill also proposes scrapping the requirement that charities must have made successful Gift Aid claims in at least two of the previous four years, which would enable newly formed charities to access the scheme and would allow small donations made by contactless payment to be covered by the scheme.

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 having to submit paperwork for each individual claim.

Wilson told MPs yesterday that 21,300 charities used the GASDS last year to claim a total of £26m.

He said he recognised this was less than was forecast but the government wanted to ensure that as many charities as possible benefited from the scheme.

Figures in the Autumn Statement in 2012 indicated that the government expected the scheme to raise almost £150m a year by 2018.

"The changes in the bill will make the Gift Aid Small Donations Scheme significantly more flexible and generous," said Wilson yesterday.

"HMRC’s provisional estimates suggest that the reforms could benefit charities by up to £15m a year, given that the 9,000 new charities that apply for recognition by HMRC each year are now entitled to claim top-up payments much sooner."

The figures would be certified by the Office for Budget Responsibility as part of the Autumn Statement, said Wilson.

The GASDS has long been criticised by charity bodies for being too difficult for small charities to access and for low levels of take-up, particularly among the smaller charities it is primarily intended to help.

Rebecca Long Bailey, the shadow chief secretary to the Treasury, told MPs that Labour was broadly supportive of the changes introduced by the bill, but her party was concerned that it did not propose any changes to the matching requirement, under which organisations must make successful Gift Aid claims worth at least 10 per cent of the amount of small donations for which GASDS claims are made in the same tax year.

The bill was passed to committee stage, which should conclude on or before 18 October.

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