Small Donations to Charities to Qualify for New Top-Up Payments

Under changes announced yesterday in The Queen's Speech, charities will be able to claim top-up payments on up to £5,000 of small donations without needing Gift Aid declarations.

The Gift Aid Small Donations Scheme will boost the income of charities and reduce their administrative burdens as they will not have to collect Gift Aid declarations on all small donations.

From April 2013, charities will be able to claim the Gift Aid-style top-up payments from HM Revenue and Customs (HMRC) without needing to get a Gift Aid declaration from donors.
Charity Donation

The top-up payment will be 25p for every pound collected in the United Kingdom, on up to £5,000 of donations, where the individual donations are £20 or less.

Chloe Smith, Economic Secretary to the Treasury, said: "This scheme will be particularly helpful for small charities that rely on bucket collections, which can find it impractical to get the necessary paperwork that Gift Aid requires. Charities and Community Amateur Sports Clubs will now be able to claim a Gift Aid-style payment on small donations without the need to collect donors' details."

Charities should note that the new scheme is a spending measure, unlike Gift Aid which is a tax relief, because there is no link between the donor's tax record and the payment to the charity. Moreover, in order to qualify, charities must have a three-year record of successfully claiming Gift Aid and continue to make Gift Aid claims. This is to reduce the risk of fraud.

HMRC is consulting on the final policy until 25 May.

For more information Mitchell Charlesworth's specialist charity services, or to contact our specialist charity Partners, simply complete a quick enquiry form or call Philip Griffiths on 0151 255 2300 or Paul Booth on 0161 817 6100.

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