As the charity sector continues to push for gift aid reform, a survey released today has found that 43 per cent of charities admit they are not making the most of the current system.

A survey conducted by the Charity Tax Group (CTG) and a coalition of other bodies with an interest in gift aid has found that a lack of clarity and cumbersome administrative requirements were hindering charities from maximising their use of gift aid.

The burdens became particularly disincentivising at the lower end of the donation spectrum, with 80 per cent of the 896 respondents reporting that they do not claim gift aid on donations worth less than £5, and 14 per cent forgoing gift aid on anything less than £10.

There was strong support for suggestions to use technology more in gift aid processing, favoured over the current system which requires charities to keep a physical paper trail. More than four in five supported a downloadable gift aid database - as favoured by CTG - but 42 per cent wanted such a facility to be free.  Only 15 per cent of respondents would be willing to pay more than £50 for such a service.

The same general philosophy applied to the establishment of online filing: a majority of respondents would use online filing, but only if it did not involve any extra administration.

Charities demanded a simplification of the rules around donors who receive benefits from gift-aided donations. Proposals to deduct the value of the benefit from the total amount eligible from gift aid received support from 84 per cent of respondents.

The complexity of gift aid claiming by donors who complete tax self-assessments was evident in the figures; less than 3 per cent of respondents said this represented a significant proportion of income for their charity. Simple reforms of the process gained approval from the survey respondents, with a majority supporting proposals to allow the donor to name the beneficiary charity (rather than use a reference number provided) and to list multiple beneficiary charities.

Gift aid reform update

Peter Fanning, chief executive of the Chartered Institute of Taxation, is to draw up a joint report on various options for reform of gift aid, with a draft to be presented at the next meeting of the Gift Aid Forum on 9 September.