Charity bodies call for overhaul of Gift Aid Small Donations Scheme

In response to an HMRC consultation, a group including the Charity Finance Group and the NCVO say they want the scheme to be more accessible to smaller charities

Small donations: HMRC urged to simplify system
Small donations: HMRC urged to simplify system

A group of representative bodies, including the Charity Finance Group and the National Council for Voluntary Organisations, have called for a radical overhaul of the Gift Aid Small Donations Scheme in order to make it more accessible for small charities.

In a consultation response, the organisations have urged HM Revenue & Customs to make all charities that are eligible for Gift Aid able to claim under the scheme, rather than only those that have made a minimum number of claims in recent years. They have also said that the matching requirement, under which charities must claim £1 in Gift Aid for every £10 claimed under the scheme, should be scrapped.

The GASDS allows charities to claim Gift Aid-like relief on up to £5,000 of small cash donations each year without paperwork for each individual claim.

An HM Revenue & Customs consultation on the scheme closed on Wednesday.

A joint response from the CFG, the NCVO, the Association of Independent Museums, the Institute of Fundraising and the Small Charities Coalition says that the GASDS has "not lived up to initial expectations", with only £27m being claimed through the scheme since it went live in April 2013.

The response says this is significantly less than original government estimates of £135m by 2014/15.

The five organisations ran a survey of 340 charities, on which it based some of their consultation response.

The majority of respondents to the survey said that eligibility for GASDS should be based solely on being registered for Gift Aid, rather than on "criteria which actively restrict access to an unknown population of potential beneficiaries", including a requirement to have made successful Gift Aid claims in two out of the previous four tax years.

The response says it is often smaller charities, which are most in need of the scheme, that are restricted or discouraged from applying.

It says the matching requirement has "become a barrier and a burden for charities" and should be removed.

Other recommendations include making all non-Gift Aid donations under £20, including cash, cheques, text and digital donations, eligible for the GASDS, and rewriting the GASDS guidance to make it more "user-friendly".

The Charity Tax Group has also issued its consultation response, which calls for renewed efforts to improve awareness of the GASDS, more accessible guidance and claiming processes, and a relaxation of the Gift Aid history eligibility requirement to improve take-up, particularly among smaller charities.

The CTG says the rules around community buildings and connected charities should be reviewed and the government should consider extending the scheme to alternatives to cash donations, such as contactless payments.

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