Umbrella bodies have won some ground over the Small Charitable Donations Bill as amendments have been proposed by the Chancellor of the Exchequer this morning, increasing the gift aid matching ratio and reducing eligibility criteria.
The Bill, which outlines the legal criteria for the gift aid small donations scheme (GASDS), goes to the House of Commons for its third reading on Monday where amendments will be debated and either approved or rejected before being passed to the House of Lords.
Amendments submitted by the Chancellor, George Osborne, include a change to the matching ratio to gift aid from 2:1 to 10:1, meaning that an organisation need only have claimed 10p in gift aid to claim £1 from the GASDS. Osborne also proposed that the Treasury be given powers to amend, abolish, or reinstate the gift aid matching rule further down the line.
While the matching proposal is still opposed by many, including by shadow minister for civil society Gareth Thomas and shadow economic secretary Cathy Jamieson who proposed an amendment that would scrap the matching principle altogether, Chris Lane, policy officer at Charity Tax Group said the Chancellor's proposals should be welcomed by the sector:
"We feel this is a really positive concession. Back at committee stage we had called for a 10:1 matching ratio but thought that that had been optimistic. While in an ideal world we wouldn't have matching or the three-year rule we do understand the reasons put forward by HMRC, worries about abuse and also cost. So we think that in the circumstances it's something that should be welcomed and we hope those amendments are approved at the next stage."
The Chancellor has also proposed the amendment to the number of years a charity must have made successful gift aid claims to be eligible for GASDS. His proposal would see a shift from three out of the previous seven years, to two out of the previous four.
'Heading in the right direction'
Karl Wilding, head of policy and research at NCVO said the body welcomes the amendments, but added:
"Our preference would still be that that eligibility criteria is rescinded because we still think it's the case that small organisations that have the biggest capacity to benefit from the scheme will not be claiming gift aid at the moment. However we recognise that this is a step in the right direction."
Katherine Smithson, policy and public affairs officer at CFG, said: "We are pleased that the government recognises some concerns raised around accessibility to the scheme. In particular this could help smaller charities to access the GASDS. However, there are still problems with some of the fundamental principles of the scheme design that lead to complexity and will present significant barriers to charities that would otherwise be interested in using it. We will continue our efforts to work with government to make the scheme fit for purpose for the sector."
Further amendments supplied from members outside of the Treasury include proposals to allow non-cash payments such as electronic payments or cheques to be eligible, and proposals to include an annual review of the scheme and an official review of its operation within two years of coming into force. MP Mark Durkin put forward a proposal for a separate HMRC fund for small charities and start-ups which do not meet eligibility for the scheme.
Read an explanation of the GASDS here
