Rules on donor benefits and Gift Aid will change next year

After consulting on the issue, the government says charities will be able to give donors higher levels of benefit without affecting their ability to claim tax relief

New rules on donor benefits and Gift Aid will be introduced next year, the government has confirmed.

The move will enable charities to give donors a higher level of benefit and still claim Gift Aid on certain donations.

At present, a charity cannot claim Gift Aid on a donation from which a donor receives any sort of benefit, such as a thank-you gift, unless the donation is worth significantly more than the value of the benefit.

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

But from 1 April, the number of monetary bands will reduce from three to two, the government said.

The benefit threshold for the first £100 of a donation will remain at 25 per cent.

Charities can offer an additional benefit of 5 per cent to donors on the amount of the donation that exceeds £100.

The government said in the 2014 Autumn Statement that Gift Aid donor benefit rules would be reviewed with the intention of simplifying them.

After a three-month consultation by the Treasury and HM Revenue & Customs in 2016, proposals were put out to a second consultation in 2017. The model that will be adopted next year was the most popular.

A spokesman for the Charity Tax Group, which supports the move, said having two thresholds rather than three would be easier for charities to understand.

HMRC said in a statement: "The changes in this measure will introduce a simpler and a more generous two-threshold benefit valuation rule for charities, making it easier to claim Gift Aid on eligible donations and so increase the overall number and value of claims."

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