Government aims to reform Gift Aid Small Donations Scheme

A new government bill will radically alter the Gift Aid Small Donations Scheme (GASDS), removing current requirements that stop new charities from collecting additional revenue.

The Small Charitable Donations and Childcare Payments Bill, introduced in the House of Commons,  proposes changes to the scheme which includes the removal of the two-year rule, which states that charities must be registered for at least the past two years before being able to apply for funds through the scheme.

However, the Charity Finance Group, which champions best practice in finance management in the voluntary sector, claims the proposals are a missed opportunity for widespread reform of the scheme and warned the government it was “locking in future failure”.

Introduced in 2013, GASDS allows charities to claim Gift Aid-like relief on up to £8,000 (since 6 April 2016) worth of small cash donations per annum, without having to submit paperwork for each individual claim.

The scheme has come in for criticism for being too challenging for small charities to access and for low levels of take-up, particularly among the smaller charities it is primarily intended to help.

The new bill proposes to scrap the two-year rule and the rule that charities must have made successful Gift Aid claims in at least two of the previous four years. This would mean newly formed charities, along with amateur sports clubs, could access the scheme.

The bill also proposes to allow small donations made by contactless payment to be eligible from 6 April next year.

However, there are no proposals to changes the matching requirement, which rules that a charity or CASC must have make successful Gift Aid claims of at least 10 per cent of the value of small donations for which GASDS claims are made, in the same tax year.

Andrew O’Brien, head of policy and engagement at the CFG, said: “The bill is a massive missed opportunity.

“If the scheme is to hit the targets that were originally intended, it needs widespread reform. It looks like it is locking in future failure.”

A spokesman for the Institute of Fundraising said the GASDS was an excellent idea but was not working effectively.

“We have previously raised concerns and called for reform to make sure that more charities are able to benefit, in particular around the matching requirement, the types of donations covered and raising awareness of the scheme more widely within the sector,” he said.

“We hope that this bill is a chance to improve the scheme and plan to engage closely as it makes its way through parliament.”

The bill is due to receive its second reading in the House of Commons on 11 October, and will provide MPs with their first opportunity to debate the new measures it contains.

For help regarding your charity finances and advice on maximising both Gift Aid and GASDS claims, please contact Moore Thompson. Our detailed knowledge of the technical requirements of the accounting and taxation regimes affecting charities means we are in the best possible position to offer you advice.