NCVO has called on the government to reconsider restrictive rules around the gift aid small donations scheme (GASDS), after it raised only a fraction of the amount expected.

HM Revenue & Customs figures released yesterday showed it had paid out only £7m to charities under GASDS. Treasury figures, released after the 2013 Budget, predicted it would pay out £55m to charities for claims in respect of the tax year 2013/14.

Charities have two years to claim, so the figure claimed will rise. A spokesman for HMRC said he expected to see a rush of applications in April and May, which are peak months for gift aid claims.

However NCVO has said it still expects the amount paid out to be far short of the estimates.

The scheme is intended to allow charities to claim a gift aid-like relief on small cash donations, even if those donations are not accompanied by a declaration and donor details. Charities are allowed to claim up to £1,250 a year on £5,000 of donations.

Charities with a “community building” can claim an additional allowance if they collect money in the course of a charitable activity. Charities considered to be connected because they are controlled by the same people can only claim one allowance.

In order to claim the relief, charities must have a good record with HMRC, must have claimed gift aid in two out of the past four years, and must claim £1 in Gift Aid for every £10 they claim under the scheme.

Andrew O’Brien, a senior policy officer at NCVO, said his organisation was now recommending the government look again at these rules.

“These rules mean too many charities can’t claim the relief,” he said. “They were intended to help small charities at a local level, raising money for local good causes with bucket donations. But those are exactly the kind of charities which are going to be put off by the complexity and the difficulty navigating this scheme.

“We think if a charity is registered for gift aid it should also be able to claim under this scheme.

“The government has said it’s concerned about fraud but we don’t really feel it’s made the case that if they relaxed the rules there would be widespread fraud.”

He said the government had already promised to review the scheme but he did not feel it was necessary to wait that long.

“Given how badly they’re undershooting their target, they need to make changes now,” he said.