Gift Aid Small Donations Bill Receives Royal Assent

The Small Charitable Donations Bill, which introduces a new scheme expected eventually to be worth at least £145m a year to charities, has received royal assent.

The legislation introduces the Gift Aid Small Donations Scheme (GASDS), which will start in the tax year 2013/14. The purpose of the scheme is to enable charities and Community Amateur Sports Clubs to claim a Gift Aid style benefit on small cash donations up to £20 where it is often difficult to obtain a Gift Aid declaration.

The Government has announced groups will be able to claim on up to £5,000 worth of eligible donations a year without individual paperwork. The scheme will only apply to small donations of £20 (Budget 2012 announced the previous limit of £10 was being increased to £20) or less, and that organisations must have a good track record of claiming Gift Aid for at least three tax years before becoming entitled to receive a top-up payment under the GASDS.

Charities must also have a clean record with HM Revenue & Customs and must claim £1 in Gift Aid for every £10 they wish to claim through the GASDS. The measures have been watered down since the first committee stage of the bill, when the government proposed that charities would not be able to use the scheme unless they had claimed Gift Aid for three years out of the past seven, and that charities would have to claim £1 in Gift Aid for every £2 claimed through the GASDS.

The Chancellor George Osborne announced the change in the 2011 Budget describing it as “The most radical and most generous reforms to charitable giving for more than 20 years”. He told the House of Commons “Instead of asking charities to submit a written record of every donation made, we will by 2013 pay for a much easier online system.

“Where Gift Aid can be claimed on small donations, up to a total of £5,000 a year per charity, without the need for donors to fill in any forms at all”. He said it would be possible to claim Gift Aid “on the contents of the collecting tin and the street bucket”, and 100,000 charities would benefit “to the tune of £240 million”.

Government figures, originally produced following the 2011 Budget, and revised following the Autumn Statement in 2012, show that the scheme is expected to cost £60m in the first year, rising to £135m by 2016/17. Full figures have not yet been released for the year after, but further projections in the Autumn Statement suggest it will rise to at least £145m.

The Charities Aid Foundation (CAF), which last year commissioned a report by the think-tank ResPublica calling for charities be able to file Gift Aid claims online, said the Chancellor had “delivered for charities and those who want to support them”. The CAF’s chief executive, John Low, said: “The commitment to bring Gift Aid into the 21st century will revolutionise this important tax relief, and go a long way towards reducing the £750 million that goes unclaimed each year.” NCVO Deputy CEO Ben Kernighan said "Relieving the pressure on charities is crucial and so the review of digital giving is welcome."

The Small Charitable Donations Act can be viewed on the Parliament website (opens in a new window).

Source: Third Sector, 25/01/13