HMRC have published a response and further consultation document “Simplifying the Gift Aid donor benefits rules”.

This follows the initial consultation in February which proposed four simplifications to the current rules whereby Gift Aid is restricted where a charitable donor receives a valuable benefit as a consequence of making a donation.

Those simplications were:

  • Reforming the relevant value test, possibly removing or reducing the number of thresholds.
  • Disregarding low value benefits, for example those with a value of less than £3.
  • Legislating the extra statutory concessions for split payments, averaging and literature.
  • Withdrawing the lifetime benefit concession.

HMRC response

As a result of the consultation responses received:

  • All four extra-statutory concessions will be legislated, including the lifetime benefit concession
  • Further proposals for consultation have been published on the issues of reforming the relevant value test and disregarding low value benefits.

Further consultation

There is strong support for a low value disregard, and HMRC are consulting as to what level this should be introduced at.

With regard to reforming the relevant value test, HMRC propose three options:

  • Retaining three thresholds, which would be slightly different from those in place currently.  The new thresholds would be:
    • Donations up to £100: 25% of the gift
    • Donations between £101 and £499: £25
    • Donations over £500: 5% of the gift
  • Reducing to two thresholds, which could be:
    • 25% of the first £100 of a donation
    • Between 2 to 4% of additional amount if there is a disregard for low value benefits, or
    • 5% of any additional amount donated if there is no disregard for low value benefits
  • Reducing to a single threshold, which could be:
    • 10% of a donation if there is a disregard for low value benefits, or
    • 15% of a donation if there is no disregard for low value benefits.

This consultation closed on 3 February 2017.


New questions for consideration

Question 18: Would any, or all, of the three relevant value reforms above – three thresholds with an adjustment to the upper limit for the £25 threshold, two thresholds operating to a ‘sliced’, or cumulative, design, or a single threshold – represent a useful simplification of the current thresholds? If so, which one(s)? Please explain why.

Question 19: Which of these relevant value reforms do you consider would be simplest for the charity sector overall? Please explain your reasons.

Question 20: Would you consider a low value disregard a welcome simplification if the government does not move to a single threshold but instead either retains three thresholds or moves to a two threshold system? Please explain your answer.

Question 21: In your opinion, what is the minimum level at which a low value disregard would be useful to charities? Please give reasons for your answer