HMRC has issued a consultation outlining plans to change the Gift Aid Small Donations Scheme (GASDS) to reduce the administrative burden for charities and provide a possible £10,000 top-up payment in circumstance where it is difficult to obtain Gift Aid declarations such as bucket collections or church plate collections
The government originally planned to review the rules in April 2016 but has brought forward the consultation, as announced at Autumn Statement 2015 last month.
The main aim is to ensure that each eligible charity should be entitled to claim a top-up payment on up to £5,000 small donations each year (increasing to £8,000 from April 2016).
The Gift Aid Small Donations Scheme (GASDS) is calculated in the same way as Gift Aid. This means that where the basic rate of income tax is 20%, small donations income of £5,000 will entitle the charity to a top-up payment of £1,250 per year (increasing to £2,000 from April 2016).
The call for evidence is seeking feedback about the current system, including what works well, potential barriers faced by charities and the reasons why some charities may not be making use of the scheme.
However, there have been problems over parity with the new rules.
When developing the policy, the government admitted that ‘charities that have similar activities are often structured in different ways, which would have created some unfair results. In order to balance this connected charities and community building rules were introduced to ensure that broadly similar results are achieved for groups of charities structured in different ways. Without these rules, some charities would be able to claim much less under the scheme than others’.
The aim of this initial 16-question consultation is to understand the impact of the current GASDS rules on all interested parties. Specifically, the government would like to gather evidence on how the current rules are understood and applied, what barriers or problems they present for the charities sector, and how they might be improved.
It is also considering whether it would be better to give each eligible charity an annual £5,000 allowance in order to create a level playing field between charities that are undertaking similar activities but structured differently so that the original policy intention of the scheme can be implemented.
Depending on the outcome of this call for evidence, a more detailed consultation will be launched after Budget 2016 on 16 March.
The closing date for feedback is 2 March 2016. Submissions should be sent to email@example.com
The consultation, Gift Aid Small Donations Scheme – a call for evidence, is available here
To find out more about major announcements in Autumn Statement 2015, click here