News & Insights

Gift Aid: small donations scheme

From April 2013 charities and community amateur sports clubs will be able to claim Gift Aid style payments for small donations without the need for individual donor declarations.

The Gift Aid Small Donations Scheme (GASDS) is due to come into effect from April 2013.

The GASDS will allow charities and community amateur sports clubs (C&C) to claim a top up payment similar to gift aid (so set at the basic rate of tax) on small cash donations of up to £20 without the need for gift aid declarations. This will be subject to an annual cap of £5,000.

GASDS is not a gift aid claim as such. It is a payment from HMRC that is similar to gift aid, but does not require a link between the donation and the donor’s individual tax status, this is why the payment can be claimed without the need to get a declaration signed by donors.

Although the legislation to implement GASDS is still being discussed, draft regulations have been published and a consultation is ongoing until December 2012. Some of the key points to note are:

  • claims for a payment under GASDS will need to be made within one year of the end of the tax year in which the donation is received;
  • interest will not be paid by HMRC on GASDS payments;
  • there will be a prescribed form available from HMRC for submitting claims which will include a declaration from the charity that the claim is correct to the best of the information and belief of the person making it; and
  • before a charity can make a GASDS claim it must have a three year track record of successful gift aid claims (which means that charities that have not previously made gift aid claims will not be able to benefit).

Concerns have been voiced by industry professionals that linking the GASDS to gift aid is confusing, the requirement for a charity to have a three year gift aid track record is unduly restrictive and that it should be operated separately. It will be interesting to see whether the GASDS retains these features once the consultation is complete.

If you would like to discuss any issues relating to gift aid or the taxation of charities generally, do not hesitate to contact Philippa Roles, head of our tax team.