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
