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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

Small donations Gift Aid scheme failing

This news post is about 10 years old

Gift Aid small donations scheme is failing to produce income for small charities

A scheme designed to enable charities to more easily claim Gift Aid on small donations is failing to bring in funds, new figures show.

HMRC released figures to show only £7 million has been claimed under the Gift Aid small donations scheme (GASDS) in its first year of operation, falling way short of the UK government’s original forecast of £55m

When it launched the scheme, the government said this figure would rise to £130m a year by 2017/18.

The scheme allows charities to claim relief on £5,000 a year of cash donations upto £20, even if they do not have the normal paperwork. This could bring in upto an additional £1,250 a year for small charities.

We think if a charity is registered for gift aid it should also be able to claim under this scheme – Andrew O’Brien

The slow start for the scheme has led to a call from the National Council for Voluntary Organisations (NCVO) for the government to reconsider its criteria which NCVO believes is unduly restrictive.

Groups can still put in claims for this year until March 2015, but the total amount for this year is still likely to be considerably lower than original estimates.

In order to claim charities must sign up to Charities Online, the new site for claiming Gift Aid. GASDS was intended to help small charities, such as churches increase their income from cash collections.

However takeup among these organisations has been lower than expected.

Andrew O’Brien, a senior policy officer at NCVO, said his organisation was now recommending the government look again at these rules.

“These rules mean too many charities can’t claim the relief,” he said.

“They were intended to help small charities at a local level, raising money for local good causes with bucket donations. But those are exactly the kind of charities which are going to be put off by the complexity and the difficulty navigating this scheme.

“We think if a charity is registered for Gift Aid it should also be able to claim under this scheme.

“The government has said it’s concerned about fraud but we don’t really feel it’s made the case that if they relaxed the rules there would be widespread fraud.”

However, a spokesman for the Charity Tax Group said it was still early days and that the scheme could still prove successful.

“Tax reliefs are vitally important to the charity sector and it is important that they are maintained and where possible extended," said a spokesman.

“Takeup for the Gift Aid Small Donations Scheme has been lower than expected, but charities do still have two more years to make a claim.

“We will be working with HMRC to promote the scheme to ensure it reaches its full potential.”

Fraser Hudghton, Scotland manager for the Institute of Fundraising, said: “This is an issue we have been keeping a close eye on.

"The take-up certainly appears disappointing so far, and we are in the process of investigating the reasons why this is the case.”