Ministers from both sides of the party divide yesterday called for the Treasury to take on board concerns of the charity sector and simplify measures in the Small Donations Gift Aid Scheme bill or face the prospect of it creating excessive bureaucracy.

At the second reading of the Small Charitable Donations Bill in Parliament yesterday, the Opposition broadly supported the measures in the bill which will enable  charities to claim gift aid-style tax relief on cash donations worth up to £5,000. This will increase the value of £5,000 worth of cash donations to £6,250. The measure was first introduced in the 2011 Budget.

While the concept was supported, the details were subject to scrutiny from across the floor. Controversial requirements that the charity must have a strong and long gift aid record with Treasury, that its small donations claims will be limited to a match 2:1 to its gift aid claims and the rules around what constitutes a ‘connected’ charity all came under - albeit relatively friendly - fire.

Ministers from Labour, the Conservatives and Liberal Democrats all cited positions put forward by NCVO, Charity Finance Group and the Institute of Fundraising in opposing the points.

Introducing the bill Chloe Smith, who is rumoured to be moving from Treasury to a Cabinet Office role, said it had been “broadly welcomed by the sector”. Mark Durkan, Social Democratic and Labour Party MP, however echoed the sentiments of many ministers in expressing concern about the bureaucracy involved in the bill.

“This is called the Small Charitable Donations Bill; let us hope that it does not end up having a by-name of the ‘Petty Conditions Bill’,” he said.

“Although nobody wants to create a charter for chancers in connection with anything the Treasury might do to support charities and charitable giving, there is a danger that some of the qualifying conditions will end up more often becoming disqualifying rather than qualifying conditions in practice.”

Balance between preventing fraud and supporting charity

Conservatives also cited concerns about the bill. Tory MP Jeremy Lefroy asked in particular that the committee reviewing the bill review the “arbitrary” limit of £20 per donation.  

“Clearly, we must strike the right balance between simplicity and the prevention of fraud, but I get the impression that we are perhaps erring slightly too much on the side of the prevention of fraud as opposed to the side of the simplicity that all honourable members want,” he said.

But Secretary to the Treasury David Gauke defended the bill and the amendments made to it by the government after its initial consultation. Gauke said that the government estimated that 80,000 charities will be claiming via the small donations gift aid scheme by 2016/17 and that it is critical the system be built to prevent fraud.

“Claiming on donations under the scheme will be simple, with no requirement to obtain a gift aid declaration from donors and with claims being made on the same form used to claim gift aid payments,” said Gauke.

“There is a reason for linking the scheme to gift aid: to prevent fraud and ensure that the money goes to genuine charities. I am sure we share the belief that the measure is the best way of doing that. I hear the concerns that have been raised about smaller charities that may not submit gift aid applications, but we have to remember that the scheme involves paying out taxpayers’ money, so we need to ensure that it goes in the right direction.”

Gauke did concede, though, that work needs to be done in relation to measures in the bill which could mean that if a trustee held positions at two separate charities, those charities may be considered ‘connected’ and unable to make separate small donations claims. Gauke said amendments to this were being considered.