The Treasury will consult next month on changes in the law that would make it easier to claim tax relief on digital giving, an official told an audience of charity tax experts.
Cerys Morgan, deputy director of personal tax at the Treasury, told the Charity Tax Group’s annual conference in London that the consultation would focus on three major areas: a single declaration process for a single online portal such as JustGiving or PayPal; a universal Gift Aid database; and changes to the wording of the Gift Aid declaration.
Morgan said that the Treasury was hoping to include the legislation in the 2014 Finance Bill, but that this would depend on what arose from the consultation.
Law lags behind
But Colin Simon, finance director of Comic Relief, told the conference he was afraid that, even with the consultation, the law would struggle to keep up with new methods of donation. "My fear is that there are so many new ways of giving that the Treasury and HM Revenue & Customs will be running to keep up," he said.
Simon said that new methods of donation might "spell the end of Gift Aid" because it would make it more difficult to get declarations from donors. If there were fewer applications for Gift Aid, "charity revenues may suffer", he said.
Gift Aid, he said, was particularly a problem with text donations. With most forms of donation, Simon said, his charity’s Gift Aid reclaim rate was "in the mid 80 per cent range", but the reclaim rate on text donations was "in the low teens".
He said the "user journey for claiming text donations" was not a good one.
And he said he was afraid that charities would struggle to claim Gift Aid on methods such as peer-to-peer payments, contactless payments and online banking.
"In each case, the public just aren’t interested in the next step," he said.
Gift Aid for online donations
Nick Aldridge, chief executive of the PayPal Giving Fund, told the conference he believed that donors should have to sign Gift Aid declarations only once for each giving platform and should not have to name the charities that would benefit.
In 2011, said Aldridge, 4 per cent of voluntary income in the UK was collected online, but this was now likely to be "6 or 7 per cent" – and Gift Aid declarations were not keeping pace with this.
He said the requirement for a donor to name the charity they were giving to on a Gift Aid form could easily be removed. "There’s now a requirement for donors to say that they pay enough tax to cover every donation they make in the year," he said. "Given that, is it really necessary for them to repeat that declaration every time they make a donation?"
Aldridge said that the Gift Aid rules were extremely difficult for his own organisation, and allowing donors to permit Gift Aid on all donations would vastly simplify the situation.
He said this would be the first step towards "the common goal of a database that charities could share" and that "you should be able to transport donor information at least within platforms and preferably between platforms".
But Karl Wilding, head of policy and research at the National Council for Voluntary Organisations, said he was not sure that a universal database was a good thing. He said donors were increasingly cautious about how their data was being used and there might be resistance to a single database containing all their information.
"Some competition between platforms is a good thing," he said. "The idea of a specific declaration for each platform strikes me as very useful."