Gift Aid Small Donations Scheme 'too complex to have real impact'

Caron Bradshaw, CEO, CFG

Gift Aid Small Donations Scheme 'too complex to have real impact'1

Finance | Niki May Young | 25 May 2012

The Gift Aid Small Donations Scheme (GASDS) is welcome, but will only be effective if it is made less complex according to a coalition of charity sector umbrella bodies in their response to the consultation on the measure.

Charity Finance Group (CFG), Charities Aid Foundation (CAF) and the National Council for Voluntary Organisations  (NCVO) submitted its joint response on the scheme which is designed to provide small charities, who would find it difficult to collect the donor details necessary to claim full gift aid, to receive up to £1,250 on cash donations up to £5,000. 

The groups welcomed the "supportive move" to create the scheme but warned that it is "extremely complex and difficult to understand, even among those familiar with gift aid".

Caron Bradshaw, chief executive of CFG (pictured) said: "The basic premise of this scheme has real potential to make a difference for the very smallest of charities. However, as it is currently set out it will be too complicated to have a real impact.

"Eligibility for the scheme is limited and this will stop those that need it most from using it. We propose a rethink on how to implement GASDS to ensure it is easy to use, achieves its potential, and doesn't further complicate gift aid."

Not a tax relief measure

The fact that GASDS differs from gift aid, in that the former is a public expenditure, rather than a tax relief measure should be made very clear to charities, the group warned. This status means that the scheme will be "subject to future changes in political priorities and public spending decisions". As a measure of distinction they suggested changing the name so that it sufficiently differs from gift aid.

Despite the difference in status the scheme as it stands is "tangled with anti-fraud model more appropriate to the tax system", and fraud could be better mitigated using a robust application process, they advised. 

Further, Bradshaw said that: "There is already substantial regulation to stop organsiations registering with the HMRC to abuse the system. We believe that these, along with the already low limit of £1,250 per charity available under the scheme should be enough to reduce fraud."

The group also voiced concerns over the scheme's potential to detract from wider gift aid reforms, including online gift aim claims and simplification of the current system. 

The GASDS is set to be introduced in England in 2013 and is subject to consultation with devolved administrations for its application in Scotland, Wales and Northern Ireland. The scheme aims to allow small charities and community amateur sports clubs (CASC) a top-up payment on small cash donations. Not all small charities will qualify, however.

Restrictions include:

  • The charity or CASC must have been registered with the HMRC for at least three consecutive tax years
  • The charity or CASC must have successfully made a gift aid claim in at least three of the last seven tax years
  • Under the scheme local groups are categorized based on the type of building that they occupy. A core allowance of £1,250 is extended to an additional £1,250 in each community premises. But charities conducting work from residential properties, for instance working remotely at care homes, do not qualify for this extension
  • Charitable activities must take place in the buildings with at least 10 beneficiaries on at least six occassions per year

The consultation, which launched on 27 March closes for comments today.


Barry Gower
Gain Gift Aid Recovery Consultants
25 May 2012

It is somewhat disappointing that although the Gift Aid on Small Donations Scheme has (quite rightly) elicited a generally negative response that it is too difficult and complex, I have not really seen any alternative proposal except for the advice that there need to be a major re-think. This will inevitably mean delays which in turn will mean that charities will lose out for another year and possibly longer.

So here are some positive suggestions.

• Draw up some income levels or bands which will differentiate the various levels at which charities will claim this money.
• Use the approach that has been successfully implemented with Self Assessment and put the onus on the charity to be responsible for creating their own claim and being able to substantiate.
• Use a similar registration system to that employed previously under SA Giving so that more detailed questions, such as connected charity status and previous fundraising and Gift Aid history can be asked and recorded.
• Let HMRC use their established systems of measuring and tracking trends to highlight any obvious deviant claims.
• Make the core claim, on the basic £5,000 relatively straight forward, but any charity, or group of charities wish to use the ‘top up’ will need to jump through the much more onerous hoops as envisaged in the Consultation Paper.

This is a suggested initial approach and is presented as a first step in developing a solution to what is a very exciting and innovative submission on behalf of the Government. Over and above everything else, despite the fact that it is not ‘Gift Aid’ in the pure sense, it has the look and feel of Gift Aid and may just achieve what Gift Aid has not really be able to do so far and that is a much deeper up-take in the sector as a whole, as well as a small but possibly meaningful cash injection to smaller charities.


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