Draft regulations setting out the legal framework for the Gift Aid Small Donations Scheme have been published by the government for consultation, Sajid Javid, economic secretary to the Treasury, has announced.
Under the scheme, which is being introduced by the Small Charitable Donations Bill, charities will be able to claim Gift Aid-like on small donations totalling up to £5,000 a year, without individual Gift Aid declarations.
The GASDS is expected to come into force on 6 April 2013. It is intended to help small charities that collect cash in bucket donations.
But the scheme has been criticised because charities will also have to raise money under Gift Aid to qualify and will have to have used Gift Aid for at least three years, and because the limit charities can raise will not rise with inflation.
A technical note published alongside the regulations says that "a number of the draft regulations provide HM Revenue & Customs with powers to tackle non-compliance and fraud".
It continues: "The provisions are necessary to deal with non-compliance and fraud by a small minority of people who already abuse Gift Aid, to which these provisions already apply, and who are likely to be attracted to the new scheme.
"While the headline amount of £1,250 that may be claimed each year may appear to be insignificant, top-up payments under the scheme are likely to be attractive to fraudsters setting up multiple charities."
The Small Charitable Donations Bill has recently has its second reading in the Commons, and the committee stage is expected to begin on 16 October. The HMRC consultation closes on 5 December.