Gift Aid Small Donations Scheme (GASDS)

Summary of scheme

The repayment applies to any small cash donations of up to a maximum of £8,000 per year.

Small cash donations

Small cash donations are those of £30 or less in cash, contactless, or chip-and-pin payments. Donations must be received in the UK and deposited at a bank in the UK. They can include foreign currency.

Donations made by cheque, standing order, text or bank transfer are not eligible. There must be no benefits associated with the donation, other than of negligible value, for example, a lapel sticker. Membership fees are specifically excluded from the scheme.

Reasonable steps should be taken to check that donations are eligible, including giving instructions to collectors on what constitutes a qualifying donation. For instance, any £50 bank notes should not be treated as a small donation. However, any bank note of £20 or below, and all coins, can be treated as small cash donations unless the charity or CASC is aware they were made as part of a single donation of over £30.

Calculation of payment

GASDS top-up payments are calculated and administered in the same way as Gift Aid, being 20/80 of net cash donations, and limited to the lower of either:

• £8,000 per tax year (maximum repayment of £2,000), anywhere in the UK, or per community building, or
• 10 times the net Gift Aid receipts of the charity in the tax year (for which it has made successful claims).

The charity must successfully make a Gift Aid claim or claims for the tax year in which it claims under the scheme. For example, if a charity claims Gift Aid on £80 of donations in a year, receiving an income tax refund of £20, it can claim a GASDS top-up on cash donations of up to £800.

A tax year for the purposes of the scheme runs from 6 April to 5 April. This is the case, even if the charity has a different accounting year end, and therefore the charity must consider in what tax year the donation was made.

 The £8,000 maximum donations limit is divided by the number of connected charities, by virtue of control by the same person or group of trustees. The charities will not, however, be treated as connected unless their purposes and activities are the same, or substantially similar.

Eligibility

A charity can claim as soon as it is registered with HMRC. However, if a charity has incurred a penalty in respect of a Gift Aid or GASDS claim in a particular year, it cannot claim under the scheme for that year or the following year.

Community buildings

Charities can claim either the basic £8,000 relief for collections anywhere in the UK, or the relief of £8,000 per community building, but not both. The community building relief is usually more generous for a charity which has more than one building, and charities will automatically be able to claim the larger amount. Connected charities with community buildings may make a joint election to claim the basic amount if this is more advantageous.

Where charities carry out their charitable activities in community buildings, one £8,000 limit is available for donations made in the same Local Authority area as each community building. CASCs are not allowed to claim the community buildings top-up.

A community building is a building which a charity uses to run charitable activities, and the following conditions must be met:

• carry out charitable activities in a community building for a group of at least 10 beneficiaries at the same time
• activities must be carried out as a group
• activities must be open to members of the general public, and not primarily for the purpose of fundraising
• none of the group must be required to pay to enter the building
• activities must be run in the building on six or more occasions in the tax year.

A building does not qualify if it is used wholly or mainly for residential or commercial purposes. Examples of buildings that can be community buildings include churches, synagogues, mosques and village halls.

The charitable activities do not need to be carried out physically inside the community building so long as they are carried out in the same Local Authority area. This means that while the community building must be used for charitable activities, the collections need not be made during these activities.

HMRC’s guidance suggests that schools would not qualify as community buildings for the school charity itself unless children who are not pupils of the school can join in freely with the charitable activity (i.e., the charitable activity is open to the public).

Administration

Claims can be made using Charities Online or by post using form ChR1.

Charities must make a claim under the scheme within two years of the end of the tax year the donation is received and must be made on a tax year basis.

If a charity makes a claim for a year which is not eligible, the amount must be repaid, and if a charity discovers that it has over-claimed, for any reason, it has 12 months to correct this.

For more information, please contact Jon Daley or your usual Crowe contact.