Is your charity aware and making use of the Gift Aid on Small Donations Scheme? If not, you could be missing out on income of potentially £2,000 or more that you can use to fund your work.
The Gift Aid on Small Donations Scheme (GASDS) is now eleven years old and provides a Gift Aid-style relief on small cash, contactless and Chip-and-PIN donations, without needing to know who the donor is or have a valid Gift Aid declaration from them.
Don’t let the complex eligibility and record-keeping requirements of the scheme put you off from making the most of this benefit. Our guide will help you see the wood from the trees.
What is the Gift Aid on Small Donations Scheme?
The GASDS has been in place since 6 April 2013 and was updated in 2017.
It gives the opportunity for charities to claim a ‘top-up relief’ at a rate of 25% on cash, contactless and Chip-and-PIN donations of £30 or less, subject to an overall annual donations limit of £8,000.
Despite having ‘Gift Aid’ in the title, this is not a tax relief and therefore there’s no requirement for the donor to be a taxpayer or for any donor declaration to be obtained. However, the scheme is administered alongside the Gift Aid Scheme by the HMRC, and claims are made online via the same system.
Charities operating from qualifying ‘community buildings’ may be able to claim relief on a higher annual limit.
The ‘who, what’ and ‘where’ of eligibility
Who?
For a charity to be eligible, it must be registered as a charity for tax purposes and must have claimed Gift Aid in the same tax year as the year in which they wish to claim GASDS. The charity must also not have received a penalty for non-compliance under Gift Aid or GASDS for the previous two years. Two or more charities that are connected by virtue of the same person or connected persons having control of charities with very similar purposes must share annual allowances.
What?
The Scheme is restricted to pure donations from individuals (not membership subscriptions or other payments attracting benefits) and to cash, contactless and Chip-and-PIN donations of £30 and less. The annual donations limit under the scheme is the lower of ten times your donations eligible for gift aid (known as the ‘matching rule’) or £8,000 per tax year (6 April to 5 April).
Where?
Gift Aid on Small Donations applies to donations collected anywhere in the UK. In cases where charities operate from two or more community buildings, they can choose between:
- One limit of £8,000 covering small donations collected anywhere in the UK
- Multiple limits of £8,000 covering small donations collected in the local authority areas of each qualifying community building
Could you claim more under the Community Buildings rules?
For the purposes of GASDS, a ‘Community Building’ is a building (or part of a building) which the charity uses to run activities. The building does not need to be owned by the charity. ‘Charitable Activities’ are defined as group activities for at least 10 beneficiaries at a time run at least 6 times during the tax year. To be eligible, the building (or the relevant part of it) must be open to the public and accessible without paying a charge.
Examples of buildings which typically qualify as community buildings include village halls, mosques, scout huts and churches. Under these criteria, charity shops or care homes would not qualify.
If a charity operating from two or more community buildings chooses to claim under the community buildings route, only small donations collected in same the Local Authority area as the relevant community building are eligible for relief under the limit relating to that community building. You do not need to hold a charitable event to collect the donations. If the charity has more than one community building in the same local authority area, you can choose which building to allocate the donations to for the purposes of the claim.
Record keeping
It’s important to be able to demonstrate you have complied with the rules of the GASDS. Your records need to show:
- Where the donation was collected
- Evidence that an eligible cash donation was banked in the UK in an account in the name of the charity
- The denominations of all bank notes received
- In the case of contactless and Chip-and-PIN donations, the transaction records including which terminals donations were collected from and their location
Where a charity is making claims under the community buildings provisions, the records should also show:
- The address of the community building and how it qualifies
- The dates and locations (address) where money was collected
- Which community building the donations collected are allocated to
As in the case of other accounting records, either paper or electronically held records are acceptable in providing the necessary audit trial.
Is it worth the effort?
There is no denying that the eligibility rules and record-keeping requirements are demanding, but putting the work in up-front to establish good systems and processes will pay dividends as time goes on. The top-up relief received may not seem significant in any one year, but will add up over time.
Taking care to give clear instructions to staff and volunteers and undertaking occasional checks to ensure things are running smoothly will likely to be sufficient to keep things on track.
Read the full rules for GASDS here.
Need some support?
Burton Sweet has a longstanding commitment to charities and civil society organisations, offering practical, professional and passionate support. We want to assist you, so you can deliver effectively for the communities you serve and show the good you do.
We can assist with advising on or reviewing your processes to ensure Gift Aid and GASDS optimisation and compliance. We can also assist with outsourced bookkeeping, management reporting, bespoke financial statements preparation and much more!
If you would like some guidance on any aspect of running your charity, please get in touch with our Senior Charity Adviser, Ed Marsh.
