Small Charitable Donations Bill moves to House of Lords

27 Nov 2012 News

Amendments to the Small Charitable Donations Bill that will make the gift aid small donations scheme more accessible to smaller and newer charitable and community organisations have been passed by the House of Commons as the Bill heads to the House of Lords.

Amendments to the Small Charitable Donations Bill that will make the gift aid small donations scheme more accessible to smaller and newer charitable and community organisations have been passed by the House of Commons as the Bill heads to the House of Lords.

Last week umbrella bodies celebrated some success in campaigning to reduce the bureaucratic burden of the Bill as the Chancellor introduced amendments to make the GASDS more accessible. At the third reading of the House of Commons yesterday these amendments were passed.

Despite its original aim of providing some gift aid-style relief for small charities, umbrella bodies had warned the Small Charitable Donations Bill, which provides the legislation for GASDS, had made it impossible for new charities to claim.

The scheme had been linked to gift aid by the HMRC with rules stating that a charity must have three years of successful gift aid claims in the last seven years, and creating a 'matching ratio' that states a charity would have to have received £1 in gift aid for every £1 claimed from the GASDS. 

Matching ratio increased

While still currently linked to gift aid the Chancellor's amendments reduced the number of years a charity must have successfully claimed gift aid to two from the past four years. He also increased the matching ratio to 10:1, meaning a charity can claim £1 through the GASDS for every 10p successfully claimed through gift aid. This change will benefit 16,000 charities according to Treasury figures. The maximum a charity can claim from GASDS remains £1,250 per year for £5,000 of small donations (under £20) received. 

Acknowledging that there were calls to remove the matching principle altogether, Sajid Javid, Economic Secretary to the Treasury said retaining the connection with gift aid would help prevent fraud:

"Let me say explain why we have this matching provision. HMRC sees even the 10 per cent rate as an act against gift aid fraud. Unfortunately, there are unscrupulous individuals who want to misuse charitable tax reliefs. They defraud the taxpayer and undermine the good name of the charitable sector, so we must be in a position to protect the taxpayer and the charitable sector.

"The lack of records also means that HMRC would have less evidence when a charity is claiming correctly under the scheme if there was no kind of matching principle. Gift aid is the closest proxy we can use to help ensure compliance under the new scheme, and the matching requirements will significantly increase protection against fraud and abuse."

However measures put forward by the Chancellor giving the Treasury power to amend, abolish or reintroduce the matching rule in the future were also approved.

Responding to these changes, Sir Stuart Etherington, chief executive of NCVO said: “The Treasury has listened to the concerns of our members and the charity sector. We have argued for many months that the Bill risked excluding the charities that it was intended to benefit. These changes will ensure that more charities can benefit from the scheme. As the scheme gets up and running, it will be essential government markets it effectively to charities and encourages take-up. We will apply further pressure to ensure that it reaches as many charities as possible.”

Community buildings amendments not passed

Umbrella bodies lament, however that amendments have not been made to the scheme's community buildings clauses, which mean that donations under the community buildings amount can only be made by group members while the charity is running its charitable activities.

CFG CEO Caron Bradshaw said: "It’s a shame that there is no movement on the community buildings provisions. The government is likely to have underestimated the number of charities affected by these rules. We need to ensure that charities working with vulnerable individuals and that can't fundraise during their activities, are not disadvantaged just because of their structure."

Amendments tabled to introduce non-cash payments to the scheme also failed to get through. More on this here.

The Bill will now move to the House of Lords on 18 December, though as it is a 'money bill' only the overall principle of the Bill will be discussed, and no amendments will be made.