I blogged recently about various tax changes affecting charities from April 2019. One change related to the Gift Aid Small Donations Scheme.
I have had a few questions from charities recently about this scheme so I thought that a reminder of what this is and how it operates would be useful – not least because, whilst this is a very helpful relief, the rules regarding eligibility are not the most straightforward.
What is the Gift Aid Small Donations Scheme?
The Gift Aid Small Donations Scheme (or “GASDS”) was introduced back in April 2013 to allow eligible charities and Community Amateur Sports Clubs (“CASCs”) to claim Gift Aid on small cash donations – for example cash collected in tins or buckets via street collections, or at religious services.
Can any charity or CASC claim?
To qualify as an eligible charity or CASC, an organisation must:
1. Be registered as a charity with HMRC
2. Have claimed Gift Aid:
- in the same tax year as you want to claim GASDS
- without getting a penalty in the last 2 tax years
- in at least 2 of the last 4 tax years (without a 2-year gap between claims) if you’re claiming on donations made before 6 April 2017
What is an eligible donation?
The scheme is available to cash donations (including contactless card payments from April 2017) of:
- £20 or less – for donations on or before 5 April 2019
- £30 or less – for donations on or after 6 April 2019 (the increase reflects the limit on contactless payments).
The donation must have been made by an individual, banked in a UK bank account, and must be used for charitable purposes. No benefit can be received by the donor in return.
Membership fees do not qualify as GASDS donations – not amounts given through payroll giving.
How much can a charity or CASC claim?
You claim 25% of the eligible donation. A total of £2,000 can be claimed – i.e. on gross donations of £8,000 (up to 5 April 2016, the limit was £1,250 of relief on gross donations of £5,000).
However, as well as the £2,000 cap the GASDS claim can’t be more than 10 times your Gift Aid claim – so for example if, in the same tax year, you’ve received £100 of Gift Aid donations then you can claim on up to £1,000 worth of donations through GASDS.
The ‘10 times’ rule does allow a planning opportunity – whilst it may increase administration requirements, the more donations that can be claimed under Gift Aid (by getting donors to complete declarations – even if these are small cash donations too), then more eligible donations can be claimed under GASDS.
Is a donor declaration needed like Gift Aid?
No – the scheme was designed to provide some relief for small cash donations where obtaining a signed gift aid declaration is difficult or impractical (such as street collections). A charity or CASC does not actually have to know the identity of the donor, unlike with Gift Aid. Therefore, there is an admin cost saving (from not having to obtain and store Gift Aid declarations) as well as a cash receipt benefit.
If Gift Aid is claimed on such a donation, then it does not qualify for GASDS.
Does the donor claim tax relief?
No, donations made via GASDS are not a tax relief for the donor. Therefore, higher-rate tax payers cannot claim further relief on their tax return for small cash donations made under GASDS.
What if the charity is connected to another charity?
If two charities are connected then all of the connected entities share the £2,000 limit between them. If you are connected through recent merger, then you may be able to take on the other charity’s claims’ history.
If you are connected and share a community building, then you may be able to make an additional claim as if you have a community building.
Every charity is entitled to claim up to £2,000 per annum (on donations of £8,000 as noted above). However, charities that also have one or more ‘community buildings’ are able to claim additional top up payments of £5,000 per building, subject to meeting certain conditions.
These conditions can be quite complex but in essence a ‘community building’ is a building, or part of a building, to which the public or a section of the public have access at some or all of the time. Buildings used wholly or mainly for residential purposes, for the sale or supply of goods, or for commercial purposes (except at times when the charity is carrying out a charitable activity in the relevant part and the charity has exclusive use of that part)
How do I claim?
Claims are made via the usual Gift Aid claim form. Where amounts are claimed for different community buildings, the donations must be split be building (and the addresses o the building noted on the claim).
Is there a time limit for claiming?
GASDS claims must be made within two years of the end of the tax year in which the donation was collected.
GASDS is a very useful scheme, especially for small charities or charities that receive lots of cash donations. If you have any questions about the scheme, and whether your charity would qualify, do get in touch.