HMRC consults on relaxation of Gift Aid Small Donations Scheme rules

HMRC has announced a consultation on proposed changes to the Gift Aid Small Donations Scheme (GASDS) with the aim of simplifying the scheme rules to ensure as many eligible charities as possible can claim the relief

At Autumn Statement 2015 the government announced it would bring forward the planned GASDS review that was originally scheduled to take place in April 2016, and held a call for evidence at the end of last year.

HMRC is now seeking feedback on a number of reforms to the scheme, which was introduced in 2013 and is designed to provide top-up payments in circumstances where it would not be feasible or practical to obtain a Gift Aid declaration, for example bucket collections or church plate collections.

GASDS contains two elements: the main top-up payment and the community buildings allowance

The ‘community buildings’ rules were designed to ensure that broadly similar results are achieved for ‘groups’ of charities structured in different ways. The intention is for national organisations, like denominations of churches, to be able to claim similar amounts whether they are structured as a single charity nationally, or as a ‘group’ structure made up of individual charities.

The consultation outlines changes which HMRC says will make it easier for small charities to access GASDS and ensure that the connected charities and community buildings rules fulfil the original policy intention.

Currently, charities must meet a number of eligibility requirements to be able to claim under GASDS, such as having been registered for at least two full tax years before accessing GASDS. Charities are also required to have made successful Gift Aid claims in at least two out of the four previous tax years with no more than two year’s gap between claims – the ‘two-in-four rule’.

HMRC says that while it is important that the link between GASDS and Gift Aid is maintained, these requirements may make it harder for small or newly formed charities to access the scheme. Under the new proposals, the two-year rule will be abolished and the two-in-four rule relaxed into a previous year only rule. This change would mean that charities would only need to have made a successful Gift Aid claim in the previous tax year to be able to access GASDS.

The consultation document says there are no plans to increase the definition of ‘small cash payment’, currently defined as a gift of ‘£20 or less in cash’. Nor does HMRC intend to extend the scope of the regime to include donations made by cheque, text message, or direct debit. However, the consultation asks for views on whether HMRC should explore with the sector whether donations made via contactless credit and debit cards be brought within scope of GASDS without creating undue complexity or opening up any opportunities to abuse the scheme.

The proposals also include amending the rules to allow charities or a ‘group’ of charities to claim either under the main GASDS allowance or under the community buildings allowance, but not both. It would still be the intention that charities receiving donations in multiple community buildings could make multiple claims under community buildings rules but not in addition to the main allowance.

The consultation closes on 1 July and details are here

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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