The Small Charitable Donations and Childcare Payments Bill has now been passed by the House of Commons to the House of Lords, after proposals to amend the Bill (which were tabled by four Labour MPs earlier in the month) have failed at the third reading in the House of Commons on 15 November 2016. The purpose of the Bill is to simplify the current rules that allow charities to claim a relief similar to Gift Aid on small donations of cash without the requirement to obtain Gift Aid declarations from individual donors.
The Gift Aid Small Donations Scheme (GASDS) was introduced on 6 April 2013 under the Small Charitable Donations Act 2012. The intention of GASDS was to allow charities to claim relief similar to Gift Aid on small donations of cash (of less than £20 each) where it was not previously possible due to the difficulty of obtaining donor details. Examples include cash donations placed on a church collection plate or cash donations thrown into a charity donation bucket at an event. At present, the maximum amount of small cash donations in respect of which a charity may claim under GASDS is £8,000 per financial year.
GASDS has been widely criticised as too complex and difficult, particularly for the smaller charities that it is primarily intended to benefit. There has been a very poor uptake of the scheme since it was introduced, for example the Government predicted that the benefit to the charity sector would be around £85m in the tax year 2014-15, but the total of actual claims made in that year only totalled £21m. Due to the poor uptake and wide criticism of the scheme on 20 April 2016 HMRC launched a consultation on proposed reforms to simplify the eligibility criteria so that smaller or newly formed charities could more easily access the scheme.
The results of the consultation were published on 10 August 2016, and led to The Small Charitable Donations and Childcare Payments Bill, which received its first reading in the House of Commons on 14 September 2016. The Bill received its third and final reading in the House of Commons on 15 November 2016, and has now been passed to the House of Lords for consultation.
The Bill includes provisions to remove the requirements that currently prevent new charities (those who have been recognised as charities by HMRC for less than two years) from claiming under the scheme. It also removes the requirement for a charity to have made a successful Gift Aid claim in at least two of the previous four tax years. Other changes include widening the scheme to extend to contactless payments (including Oyster cards). However, it does not remove the Gift Aid matching requirement, which links the maximum amount of GASDS claims to the amount claimed by a charity under the normal Gift Aid rules: at least £1 must be claimed in Gift Aid for every £10 claimed under GASDS. It also does not extend to cheque, text or internet donations.
The Bill has been criticised as not going far enough by groups like the National Council for Voluntary Organisations and the Charity Finance Group. Comments included that the Bill was a “missed opportunity” and, although the relaxation of eligibility criteria was welcomed, the Bill does not represent the widespread reform needed to maximise uptake of the scheme.
In response to submissions for amendments to the Bill Jane Ellison MP (Financial Secretary to the Treasury) commented that the scheme “was never intended to cover methods of donations for which well-established and well-used processes for claiming Gift Aid already exist". She also said that the retention of the Gift Aid matching requirement is intended to deter fraudulent claims.