Changes to Gift Aid Small Donations Scheme
The Gift Aid Small Donation Scheme (GASDS) is an important part of churches’ financing and allows Gift Aid to be claimed on many cash donations that would otherwise be ineligible. The rules on what can, and cannot, be claimed changed in April 2017 and although many small churches will be unaffected some may find that they can now claim much more than before.
Somethings have not changed, in particular:
• The limit of £20 per donation still applies – so you cannot claim for gifts such as £40 donated in an unmarked envelope or an occasional £50 note in the collection.
• GASDS claims must be made within two years – although other timing issues have changed.
• The Gift Aid multiplier – sometimes called the ‘matching rule’. The limit on GASDS is still 10 times the amount claimed on Gift Aid in the same tax year.
Things that have changed are as follows:
Earlier first claim: A key change is the removal of the need for HMRC recognition for two complete tax years and have a history of successful Gift Aid claims before the first claim. This is good news for church plants looking to run separately from their mother church.
Claims limits per building: Prior to April 2017 charities could claim on donations up to £8,000 plus and additional £8,000 of small donations for each community building they operate from. From this year, the rules are structured depending on how many buildings they operate from.
Charities operating from one community building (or no buildings) can claim on donations up to £8,000 which can be collected from anywhere in the UK such as at village fetes or church weekend retreats.
Where a charity operates from more than one building – such as a school for Sunday meetings and a village hall for midweek activities it can claim either:
• a maximum of £8,000 on donations collected anywhere in the UK
• a maximum of £8,000 for each community building on donations collected in the same Local Authority area as that building.
There are a number of rules for what qualifies as a community building including:
• It must be on a separate site - a hall on the same or adjoining plot of land as a church does not qualify but a hall several properties away does.
• It must not be a commercial building – unless there is exclusive use during when donations are made so, for example, a hired room at the back of a pub would not qualify.
• The charity’s activities must be held there at least six time a year, be open to the public (or a section of it) and have a minimum group size of 10 people.
Where a charity is claiming for multiple buildings any donations made outside of the buildings (such as at a village fete) can be assigned to any building that is in the same local authority area as the donation is made.
As always there will be winners and losers. For most small charities who do not reach the £8,000 limit the impacts will be negligible but for some churches that exceed £8,000 limit it may be worth considering the options carefully.
HMRC have issued a summary briefing on new rules for GASDS and a full guide is available from the HMRC website.