The Gift Aid Small Donations Scheme allows charities and Community Amateur Sports Clubs (“CASC”) to claim gift aid on small cash donations of up to £20 (where a charity conducts a street or religious service collection), without needing to obtain a Gift Aid declaration or establish a link to the donor’s tax record.
The current requirement is that the organisation has been recognised as a charity or registered as a CASC for at least two tax years, and has made at least one successful Gift Aid claim in two of the previous four years, without a gap of at least two years. This has now been removed.
This will make it easier for newly formed and existing smaller charities or those with less capacity to assess their eligibility under claim. However, an organisation will still be disqualified from making a GASDS claim where it has incurred a penalty in respect of a GASDS or Gift Aid claim in the tax year in which the offending claim was made and the following tax year.
The claim limit under the GASDS also remains; meaning that in any tax year a charity can only claim a top-up payment on small donations totalling ten times the amount of its Gift Aid donations for that tax year. So if a charity claims Gift Aid on £100 worth of donations it can claim a GASDS top-up payment on small donations (worth up to £1,000), subject to a maximum "specified amount" (currently £8,000). This means that the maximum top-up payment that can be received for a tax year is, at present, £2,000 (i.e. 25% of £8,000), subject to the community building rules (see below).
Where charities and CASCs are connected i.e. where the same persons or connected persons have control over them and their purposes and activities are the same or substantially similar, they share the GASDS limit between them.
From 6 April 2017, donations made by contactless payment will also qualify under GASDS, including payments made via contactless card and Apple/Android Pay or similar. Due to the development in card payment technology it is now common for people not to carry cash, which presents a problem for those charities trying to attract street donations. Several charities have responded to this through the use of ‘tap-to-pay’ devices and this change is a welcome response to the introduction of new technology.
Payments made by cheque, debit/credit card, text message or bank transfer remain excluded.
Previously, it was possible for a charity or a group of connected charities (but not a CASC) to increase the amount of its donations where it operated charitable activities in a community building. In addition to the usual GASDS top-up payment on up to £8,000, it could also claim a GASDS top-up payment on up to £8,000 of small donations received in each community building in which it operated (the community building amount). So a charity which undertook its activities in numerous community buildings could substantially increase its GASDS claim.
From 6 April 2017 a charity, or group of charities, can claim either the £8,000 Standard Amount or the community buildings amount, but not both. So a charity or a group of charities will only be able to claim in respect of small donations over £8,000 where there is more than one community building. It will, however, no longer be necessary for donations to be received inside a community building for it to come within the community building amount; rather donations made in the local authority area in which the building is located can qualify.
The new rules are designed to simplify the GASDS and make it accessible to more charities. The extent to which they do this is up for debate, but the government has estimated that the changes will result in an additional £15 million per year being paid out to charities under the scheme. The scheme can result in a top-up payment of £2,000 per year so it is worth investigating if your charity can make a claim.
For more information please contact your usual Blick Rothenberg contact, or Nimesh Shah on +44 (0)20 7544 8805 or at firstname.lastname@example.org