Gift Aid Small Donations Scheme (GASDS)

From 6 April 2016 charities will be able to claim a Gift Aid style top-up payment on up to £8,000 of small cash donations per year.  From April 2013 to April 2016 the top-up payment was limited to £5,000 per year.

Charities are eligible to join the scheme if they have:

  • Existed for at least two complete tax years as a registered charity or Community Amateur Sports Club.
  • Established Gift Aid repayment claims for at least two out of the last four years.
  • Claimed Gift Aid in the same year as the GASDS claim.
  • Not incurred a penalty on a Gift Aid or GASCS claim in the current or previous tax year.

New charities should act immediately to ensure that they do not miss out by 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):

  • Donations must be cash donations of up to £20 per donation.
  • Donations must be in cash, not cheques or any other payment form, and must be banked in a UK account.
  • No benefit must attach to the cash gift, but you may give out a badge or sticker.
  • Donations which are made with a Gift Aid declaration are excluded, as are membership fees.
  • The top up is calculated as the 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 £8,000 (£5,000 up to April 2016), and
  • The amount of the small donations received.

This means that the maximum a charity or Community Amateur Sports Club (CASC) will be able to claim a repayment of up to £2,000 per year on up to £8,000 of qualifying donations.  Prior to April 2016 the maximum repayment was £1,250 per year on up to £5,000 of qualifying donations.

Basic example:

Furry Pets Trust (a very small charity) receives £450 in cash donations from its collecting box in a local pet shop. It also receives £700 in Gift Aid donations in 2016/17. It meets all the other qualifying conditions. The maximum donations that the charity may include in its top up claim is the lower of:

  • 10 x £700 (£7,000) and £8,000, and
  • £450.

The claim is restricted to £450 x 20/80 = £112.50.

Collections in community buildings

From April 2016 charities can also claim a top-up payment on up to £8,000 of small donations collected during charitable activities held in a community building such as a church or village hall.  From April 2013 to April 2016 the limit was £5,000.

  • Charitable activities must be held in community buildings at least 6 times in a single tax year.
  • A charitable activity must include at least 10 people who will benefit from the activity and be open to members of the public.
  • Entry fees cannot be charged.
  • Activities carried out primarily for the purposes of fundraising such as jumble sales, concerts and dinners don’t count.
  • CASCs cannot claim a top-up on donations collected during activities in community buildings.
  • There’s no limit to the number of buildings that a charity can claim for.

A charity which carries out charitable activities in two community buildings can claim a top-up on small donations of up to £24,000 in a single tax year: a maximum of £8,000 for each of the two community buildings and £8,000 collected elsewhere.

For example:

Furry Pets Trust (a very small charity) receives £4,000 in collection boxes around town, received £2,500 of small donations during its monthly charitable activities held in a village hall, and £3,000 of small donations collected during charitable activities held every other month in a local church.  The charity can claim a top up in respect of all three collections.

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.

For small donations charities must record how much money was collected on each date, and each denomination of coins and notes.

For community building collections they must record the address and postcode, the type of charitable activity and an estimated number of beneficiaries who attended.

Latest developments

HMRC are currently undertaking a review of the Gift Aid Small Donations scheme, with a call for evidence which closed on 2 March 2016, and a consultation which subsequently opened on 20 April 2016 and which proposes a number of reforms.

Links

HMRC guide: Gift Aid Small Donations Scheme.

HMRC consultation: Gift Aid Small Donations Scheme.

Updates

28 April 2016 guide updated with section on collections in community buildings added, together with links to the new consultation opened 20 April 2016.

16 December 2015 added what's new section to include the change in maximum claim amount from April 2016 and links to HMRC's consultation document.