Are you making the most of the Gift Aid Small Donations Scheme?

Since it was first introduced in 2013, the Gift Aid Small Donations Scheme (GASDS) has gone through a number of important changes, making it more accessible and valuable. It could be particularly valuable to your charity if you’re using more than one premises, or you’re able to claim at least some Gift Aid but are not yet making use of the GASDS.

What is the GASDS?  

Similar to Gift Aid, GASDS allows Charities and Community Amateur Sports Clubs (CASCs) to claim an additional payment from HMRC equal to 25% of the qualifying donations it receives. Unlike Gift Aid, the administrative burden is light. Under GASDS there is no requirement for the donor to pay tax, and there’s no need to keep records of individual donations, or to obtain declarations from each donor. There is much less paperwork. 

The GASDS top-up payment can be claimed on small, unattributed cash or contactless donations of £30 or less, up to a maximum of either:

• £8,000 of donations collected anywhere in the UK, or
• £8,000 for each community building (only charities can claim for community buildings, not CASCs).

For these purposes, a community building is one that a charity uses to run charitable activities and broadly where:

• On at least six occasions, at least ten beneficiaries attend a single charitable event for a group activity.
• The event is free to enter and open to the public or a section of the public.

N.B. There is no need for the charity to own the building.

GASDS is not a replacement for Gift Aid, but a potentially valuable addition. It’s important to continue to claim Gift Aid where relevant. Gift Aid affords additional relief to the taxpayer which is not available under GASDS.

What’s changed?

When GASDS was introduced in 2013, HMRC made an overly cautious start. The initial idea was for a simple system to benefit mainly small charities relying on cash collections. This worthy aim was hampered by a fear that the lack of records would open the flood gates to excessive and fraudulent claims. The scheme therefore included unnecessary rules, including a complicated requirement for a history of claiming Gift Aid, and restrictions over where certain collections could be held. As a consequence, GASDS has always been underutilised.   

In successive efforts to boost uptake, changes have since been introduced to: 

• Increase the total amount that can be claimed from £1,250 to £2,000 (per charity or community building).
• Increase the maximum individual donation that can qualify from £20 to £30.
• Include donations made by contactless payment.
• Simplify the Gift Aid requirements so that any charity (or CASC) claiming any Gift Aid can benefit – there’s now a simple cap allowing for HMRC payments under GASDS of up to ten times the amount of Gift Aid claimed in that year.
• Allow claims for donations collected in the same local authority area of a community building rather than just at the building itself.

Though there are still some conditions and rules that need to be followed. These cover matters such as record keeping; how connected charities are treated with regards to the UK-wide and community buildings allowances; and correctly operating Gift Aid (GASDS is not available where tax compliance penalties have recently been imposed regarding Gift Aid). GASDS now strikes a sensible balance between offering small charities the simple system originally envisaged and protecting the exchequer.

What does this all mean?

Smaller charities that previously found the rules intimidating may now find a claim is worthwhile. For those not claiming Gift Aid, finding opportunities to make even a small claim can have a big impact. A Gift Aid claim of £200 could potentially open the door to a larger GASDS claim of £2,000 if sufficient cash donations are also received.

The changes to the community buildings rules could be of particular benefit for charities operating from a number of premises, such as churches. Affected charities should revisit whether the claim for each community building is maximised to include cash collected elsewhere in the local authority area.

Our charity tax experts can review your charity’s individual circumstances, advise on how to optimise your Gift Aid and GASDS position, and give you the practical steps to do this. If you would like to speak to one of our team, please fill out the form below and we’ll be in touch.