Gift Aid Small Donations Scheme (GASDS)

HMRC has updated its guidance on the Gift Aid Small Donations Scheme, to incorporate changes effective from 6 April 2017. This page is in the process of being updated.

From April 2013, charities which receive small cash donations of £20 or less are able to apply for a ‘Gift Aid style’ repayment without the need to obtain Gift Aid declarations for those donations. The amount of small donations on which the repayment can be claimed is capped at £5,000, or ten times the amount of donations on which it claims Gift Aid in the tax year.

It was announced in the 2015 Budget that the limit for claims would be increased to £8,000 with effect from April 2016, and a review of the scheme is being undertaken in 2016.

The scheme applies to donations collected and banked in the UK. Payments under the scheme are not repayments of tax but are funded from public expenditure

Claims are based on a tax year irrespective of the structure (corporate or otherwise) of the charity and must be made within one year of the end of the tax year in which the small donations are collected. Donations must be pure gifts, although small tokens of negligible value such as lapel stickers will be allowed. The donations must be in cash only (not by cheque or debit card) and collected and banked in the UK.

Higher rate tax relief will not be available to donors. Gifts made under Gift Aid or Payroll Giving are not eligible, nor are donations used for non-charitable or non-qualifying purposes, or for membership subscriptions.

In order to be eligible to make claims under the GASDS in respect of small donations made in a particular tax year a charity must have been registered for at least the two previous tax years, and have made a successful Gift Aid claim in at least two of the previous four tax years. There must not have been a period of two or more consecutive complete tax years within that four-year period in which it made no successful claims. The charity must not have incurred a penalty in respect of a Gift Aid or GASDS claim: if it does, it will not be eligible to claim under GASDS in the tax year in which the penalty arose, or the following tax year.

A charity must make Gift Aid exemption claims on donations received in the same tax year in order to make a claim to a top-up payment under the GASDS. The total Gift Aid donations must be at least 10% of the small donations on which top-up payments are claimed.

There are special rules in certain circumstances to increase the maximum amount of small donations on which top-up payments can be claimed by some charities. If a charity (not a CASC) runs charitable activities in a community building, the maximum limit is increased from £5,000 of small donations by up to a further £5,000 for small donations collected in each community building. There are a number of detailed requirements to qualify for this additional relief which are set out on the HMRC website.

Charities that are connected with one another will share between them the maximum £5,000 limit on which small donations may be claimed. However, the additional allowance due to a connected charity that runs charitable activities in a community building will not be affected.

Claims under GASDS must be made using the Charities Online system for Gift Aid.

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