Government publishes call for evidence on Gift Aid donor benefit rules

The paper, published on the Treasury's website, says many charities have difficulty understanding the rules and avoid using them

Gift Aid
Gift Aid

The government has published a call for evidence on Gift Aid donor benefit rules amid concerns that they are not fit for purpose.

The paper, published yesterday on the Treasury’s website, says many charities have difficulty understanding the donor benefit rules and avoid using them.

Gift Aid rules allow charities, within certain limits, to give benefits to donors – such as memorabilia or invitations to social events – as a way of saying thank you.

The general rules are that for donations of up to £100, the value of the benefit can equal 25 per cent of the donation; for those between £100 and £1,000, the value of the benefit is capped at £25; and for donations of more than £1,000, the value of the benefit can be worth 5 per cent of the donation, up to a maximum of £2,500.

But there are other exceptions and special rules are in place governing their use.

"Many charities have difficulty understanding the current donor benefit rules," the consultation paper says. "It is our understanding that, in some cases, charities decide to forgo claiming Gift Aid on some donations rather than seek to understand, and ensure that they are compliant with, the existing rules.

"The government recognises that the current rules are complex, and is concerned that they are no longer fit for purpose.

"Therefore, in the Autumn Statement 2014, the government announced that – as part of its commitment to encourage charitable giving and maximise the amount of Gift Aid claimed on eligible donations – it would review the current donor benefit rules, with the intention of simplifying and improving them."

It says the call for evidence will inform the review and will be followed up with a consultation on proposals for reform later this year.

The paper contains 25 questions that cover, among other things, charities’ understanding of donor benefit rules and the benefits they provide.

Michael Birtwistle, senior policy officer at the National Council for Voluntary Organisations, said the outcome of the consultation had the potential to make the donor benefits regime considerably more simple and make it easier for charities to engage with it.

He said the NCVO could help any member charities that wanted to provide evidence anonymously.

The deadline for responses to the call for evidence is 9 October.

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