From 6 April 2013 charities will be able to claim a Gift Aid style top-up payment on up to £5,000 of small cash donations per year.

Charities may apply to join the new scheme when they have established Gift Aid repayment claims for the last two years, and meet various other conditions. Young charities should act immediately to ensure that they do not miss out by not registering for Gift Aid so that they will eventually meet the qualifying conditions for the new scheme.

Key features of the Gift Aid Small Donations repayment scheme (GASDS):
  • Charities are able to claim a top-up payment on small cash donations of up to £20 per donation.
  • Donations which are made with a Gift Aid declaration are excluded.
  • The top up is calculated as cash donation x basic rate tax%/100 less basic rate tax %

The maximum amount of the claim is the lower of:

  • 10 x Gift Aid donations or £5,000, and
  • the amount of the small donations received.

subject to special rules for connected charities and charities running charitable activities in community buildings. 

This means that the maximum a charity or Community Amateur Sports Club (CASC) will be able to claim a repayment of up to £1,250 per year on up to £5,000 of qualifying donations

Basic example:

Furry Pets Trust (a very small charity) receives £120 in cash donations from its collecting box in a local pet shop. It also receives £490 in Gift Aid donations in 2013/14. It meets all the other qualifying conditions (see below). The maximum donations that the charity may include in its top up claim is the lower of its small donations, £490 x 10 and £5,000. However it only received cash donations of £120.

It's claim is restricted to £120 x 20/80 = £30

Conditions for the Claimant:

  • Is a charitable trust or company registered by HMRC as a charity or CASC for tax purposes.
  • It receives cash donations which do not qualify for Gift Aid and it banks these in a UK account.
  • It receives donations under Gift Aid.
  • It makes a claim under Gift Aid in the tax year.
  • It has been running for two complete tax years (6 April to 5 April)
  • It has made a successful Gift Aid claims in at least 2 of the previous 4 tax years and it has not had a gap or 2 or more consecutive tax years when it did not claim Gift Aid.
  • It had not incurred a penalty under Schedule 24 Finance Act 2007, or regulations under section 11  on a Gift Aid or GASDS claim made in the current or previous tax year.

Conditions for GASDS donations

  • Only cash:notes or coin, but not cheques, or any other payment type.
  • Up to £20 per individual donor
  • No benefit must attach to the cash gift, but you may give out a badge or sticker.
  • Only cash banked in a UK bank or building society qualifies for GASDS

Donations covered by a Gift Aid donation are outside GASDS and are not included because Gift Aid repayments are available on Gift Aided donations under the normal claim process.

Compliance
Charities have to observe the detailed qualifying conditions however they need to ensure that:

  • They are not double counting some cash donations which are made by donors who have already signed enduring Gift Aid declarations.
  • That they are not claiming GASDS on donations made of more than £20 per individual.

Links: HMRC Gift Aid Small Donations Scheme.