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Gift Aid Small Donations Scheme

by Tax Faculty Team on 08.10.2013 11:28

New HMRC helpsheet

HMRC has published a New Gift Aid Small Donations Scheme helpsheet and has also updated the detailed guidance on both non-charitable expenditure and tainted charity donations.

The new Gift Aid Small Donations Scheme (GASDS) allows eligible charities and Community Amateur Sports Clubs to claim a Gift Aid style top-up payment of up to £1,250 on small cash donations they receive in the UK each year without needing a Gift Aid declaration from the donor. A small donation is a cash donation of £20 or less and only small cash donations received on or after 6 April 2013 can qualify under this scheme.

The existing Gift Aid scheme requires you to have a Gift Aid declaration from the donor. However, as it can be difficult to get declarations for small cash donations, such as those from street collections, declarations are not needed under the GASDS

We note that the helpsheet advises charities looking to claim under GASDS:

‘If you have a Gift Aid declaration you should claim Gift Aid on that donation and not GASDS as this will be more beneficial.’

Apart from the upper limit, which is £5,000 of small cash donations per year, it is not clear to us why Gift Aid is better (higher rate tax relief not being relevant to the charity). We have asked HMRC to explain the advantage in case we have missed something, but if you have suggestions, why not share them by posting a comment below?