The Philanthropy Review has called on the government to reform gift aid guidelines to allow charities to claim gift aid on small cash gifts, advising such a reform could bolster charities’ collective coffers by £175m a year.

The review, headed by chair Thomas Hughes-Hallett, chief executive of Marie Curie Cancer Care, suggests that HMRC should allow charities to submit one gift aid claim for the entirety of their collections of individual gifts of less than £10. HMRC would then allow gift aid of 25 per cent to be claimed on 61 per cent of those donations - the proportion of the population who pay tax.

Small cash donations, such as coins in street collectors’ buckets, make up around 16 per cent of all giving in the UK, bringing their total value to about £1.7bn annually.

The gift aid reform calls have received backing from the NCVO and the Royal British Legion.

Chris Simpkins, executive director of the British Legion, said that such a reform could make a significant difference to the income from its Poppy Appeal, bringing in a potential extra £4m from the target £36m for this year’s appeal.