Budget changes donation limit under Gift Aid Small Donations Scheme

Chancellor Philip Hammond says the individual limit will increase from £20 to £30 next April

The Budget bag (Photograph: PA)
The Budget bag (Photograph: PA)

A change to the individual donation limit under the Gift Aid Small Donations Scheme and some small funding pots that will benefit specific types of charities were among the Budget announcements of interest to voluntary sector organisations.

The Treasury said in the Budget documents yesterday that the individual donation limit for gifts under the Gift Aid Small Donations Scheme would be increased from £20 to £30 in April next year.

The donation limit will be increased to be in line with the maximum amount that can be paid on a contactless payment card. The government estimates the move will cost the public purse an additional £5m a year.

In his speech before parliament yesterday, Philip Hammond, the Chancellor of the Exchequer, announced funding that will benefit some charities, including an additional £10m of capital funding for air ambulance charities in England and £10m to support veterans with mental health needs to mark the centenary of the end of the First World War.

Hammond said the government would provide £15m of funding for charities and other organisations to distribute surplus food and make up to £8m available towards the cost of repairs and alterations to village halls and facilities run by miners’ welfare and armed forces organisations.

A further £1.7m will be available to a charity to provide educational projects in schools to mark the 75th anniversary of the liberation of the Bergen-Belsen concentration camps.

Other measures announced in the Budget affecting charities included an increase in the small trading tax-exemption limits for trading that does not relate to a charity’s primary purpose – for example, the sale of Christmas cards to raise funds.

The Treasury said that from April the upper limit for trading that charities could carry out without incurring a tax liability would increase from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover is more than £200,000.

The Treasury said that charity shops using Retail Gift Aid would be able to send letters to donors every three years rather than every year when their donations raised less than £20 a year.

Hammond also announced an additional £650m for local authorities for social care, which is likely to benefit some charities working in this area.

But the Budget documents made no mention of changes to prevent online donation platforms from taking fees from Gift Aid claimed on donations.

Action had been expected after Robert Jenrick, the Exchequer Secretary to the Treasury, promised in July action on the matter "at the next opportunity" if the practice was not stopped.

John Hemming, chair of the Charity Tax Group, said his organisation had received feedback from the Treasury that indicated it had listened to stakeholders and felt that dialogue between the sector and intermediaries was best, given the steps some platforms had recently taken in this area.

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