The Small Charitable Donations Bill has passed through the House of Lords.
The bill will introduce the Gift Aid Small Donations Scheme, which will enable charities to claim Gift-Aid like payments from April on small donations totalling up to £5,000 a year without individual paperwork.
The bill has passed to the consideration of amendments stage, where the two houses must agree on amendments the other has made before it can receive royal assent and become law. But this bill cannot be amended by the Lords because it is considered a ‘money bill’.
During a debate in the Lords on Tuesday, peers questioned Lord Newby, a Liberal Democrat minister and deputy chief whip, about the GASDS being over-bureaucratic and more complicated than necessary.
Lord Hodgson, the Conservative peer responsible for the review of the Charities Act 2006, said he hoped the tax authorities would be "proportionate and open to understanding how the smaller charity sector works".
"In welcoming this bill, I am asking the minister to make sure that all the good it is planned to do, and that we hope it will do, will not be undone by heavy-handed bureaucracy by the tax authorities," he said.
The government amended the bill in the House of Commons last month so that, to be eligible to claim under the scheme, charities must have made successful Gift Aid declarations in two out of the previous four tax years, rather than three out of the previous seven.
Hodgson asked if the two qualifying years had to be consecutive or not. In response, Newby said charities would need to make a Gift Aid claim at least every other year.
Baroness Hayter, a Labour peer, said it seemed that HM Revenue & Customs was more concerned about fraud that helping charities.
Baroness Barker, a Lib Dem peer, said she hoped "the same degree of assiduous attention is paid to the affairs of Google, Amazon and Starbucks".
Newby said HMRC received about £10m in fraudulent Gift Aid claims last year.
"We are not talking about a long and hugely complicated form at all. It is very straightforward. That is one of the key things that HMRC is trying to do. It has to strike a balance between something relatively simple and something that is not open to fraud," he said.
He said the government was not setting up the scheme "in order not to hand out the cash"
"We are setting up the scheme because we are very keen that it is successful and is able to help charities in this way," he said.
HMRC plans to produce two levels of guidance, Newby said - a starter level setting out the rules as simply as possible, and detailed guidance to explain how the law works to larger charities.
A publicity campaign will be launched over the next few months to alert charities about the scheme and HMRC will write to every charity that has claimed Gift Aid within the past three years in the New Year.