Gift Aid Small Donations Scheme should be inflation-linked, say MPs

Gareth Thomas, shadow charities minister, presses for the change in a Commons debate

Gareth Thomas
Gareth Thomas

The amount that charities can claim under the Gift Aid Small Donations Scheme should be linked to inflation, MPs have said.

The GASDS will allow charities to claim Gift Aid-like relief on cash donations of £5,000 a year, even if those donations are not accompanied by Gift Aid declarations. However, at present the limit on the bill is not linked to inflation and parliament would have to vote on any increase.

Speaking during the second reading of the Small Charitable Donations Bill, which will introduce the GASDS, Bernard Jenkin, the Conservative MP for Harwich and North Essex, said the bill should be amended so that the limit on what charities can claim could be increased through secondary legislation.

And Gareth Thomas, Labour MP for Harrow West and the shadow charities minister, said the government should ensure that the limit was raised in line with inflation every year.

Chloe Smith, the minister steering the bill through the Commons, said in response only that the limit would be "kept under review". Smith, who has today moved from her job as economic secretary to the Treasury to become a Cabinet Office minister, also told MPs that restrictions on who could claim, and how much they could claim, had to remain in place to prevent fraud.

At present, organisations can use the relief to claim only £2  for every £1 they have claimed in Gift Aid, and are eligible only if they have claimed Gift Aid in three of the past seven years and have a good record with HM Revenue & Customs.

Thomas said during the debate that charitable bodies including the National Council for Voluntary Organisations, the Charity Finance Group and the Institute of Fundraising had called for the matching element to be abolished and the eligibility requirements to be less strict.

"I know that the three-year rule and the requirement to match claims with Gift Aid claims have raised some concerns among charities," said Smith. "But I must be frank and say that the generous nature of charitable tax reliefs means that they are vulnerable to exploitation, with a small minority looking to take advantage of the arrangements."

Smith said the matching requirement had already been reduced in response to charities' concerns. It originally required charities to claim £1 of Gift Aid for every £1 claimed under the new scheme.

She said that the government expected the GASDS to be worth £100m a year to the charity sector. But this number has previously been questioned by the NCVO, which said that for the bill to produce this much benefit, there would have to be a sizeable increase in the number of charities claiming Gift Aid.

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