Gift aid small donations scheme: Q&A

From 06 April 2013, HM Revenue and Customs introduced the Gift Aid Small Donations Scheme, to allow charities and Community Amateur Sports Clubs to claim Gift Aid without a completed Gift Aid Declaration on small donations.

What is the Gift Aid Small Donations Scheme?

The Gift Aid Small Donations Scheme (GASDS) was introduced on 06 April 2013, to allow eligible charities and Community Amateur Sports Clubs (CASCs) to claim Gift Aid on small cash donations, where it is difficult to collect a Gift Aid declaration. An example is cash collected in street collections or at religious services. Your charity or CASC does not have to know the identity of the donor, unlike with Gift Aid, payments under GASDS are not a tax relief and there is no audit trail back to the original donor’s tax record. You don’t have to collect Gift Aid declarations from your donors for GASDS.

Did the GASGS replace the Gift Aid Scheme?

No. The scheme is in addition to Gift Aid.

Can my charity claim under the GASDS but not under the Gift Aid Scheme?

Your charity or CASC still needs to make regular Gift Aid claims in order to be able to claim GASDS payments. You can still claim Gift Aid on donations under £20 and, unlike GASDS, there is no limit on the amount of donations on which your charity or CASC can claim Gift Aid relief. A donation on which a Gift Aid declaration is given to a charity or CASC cannot be a small cash donation for the purposes of the GASDS. If you haven’t made a Gift Aid claim before, or you haven’t claimed for some time, follow the link below to find out more about the Gift Aid scheme for charities and CASCs.

How is the amount the charity can receive from HMRC calculated?

GASDS is not a tax relief (like ‘normal’ gift aid). However, the payment is calculated in the same way as a Gift Aid payment even if the GASDS is not a form of tax recovery. Payments to charities and CASCs under the Gift Aid scheme and the GASDS are based on the basic rate of income tax for a tax year. So where the basic rate of income tax is 20 per cent, small donations of up to £5,000 a year will entitle the charity or CASC to a top-up payment of £1,250.

What donations are eligible?

The scheme applies to cash donations of £20 or less, received after 6 April 2013.

Is there a limit to how much can be claimed?

Most charities can claim Gift Aid on up to £5,000 of small cash donations in a tax year, giving a total of £1,250 in the GASDS for the tax year. However this claim limit may be restricted by the charity’s circumstances e.g. where it is connected to other charities, or if its income is below or above £5,000. Follow this link to use the ‘How much can my organisation claim under GASDS?’ flowchart to tell you if your charity or CASC may have a different claim limit.

Does my charity qualify?

If your organisation is recognised by HMRC as a charity or CASC for tax purposes and makes claims under Gift Aid, it needs to meet 3 conditions to qualify: the start-up period requirement, the recent claims condition, and the penalties condition.

What is the start-up period?

In order to qualify, the charity or CASC must have existed for at least two complete tax years (6 April – 5 April). This period is calculated from when the organisation was recognised as a charity or CASC for tax purposes rather than when the organisation registered with HMRC or started operating.

What is the recent claims condition?

In order to qualify, the charity or CASC must have made at least two successful claims (non-GASDS claims) during the previous four complete tax years, and there must not be a gap of two or more tax years between those claims or since the last claim was made. For this condition, the tax year to consider is the one in which you make the Gift Aid claim, not the year in which the donations that you are claiming Gift Aid repayments on were made. Gift Aid claims can be made up to four years after the end of the tax year that the claim relates to. NB: The condition is that you have 2 successful claims, so the charity would still qualify if this is met, even if it also had unsuccessful claims or penalties (see below) in the same tax year.

What is the ‘no penalties’ condition?

If a charity or CASC incurs a penalty in respect of a Gift Aid or GASDS claim, it will not be eligible to claim top-up payments under the GASDS for either the tax year in which that claim was made or the following tax year. However, successful Gift Aid claims made in those tax years will still count in determining eligibility in subsequent years.

My charity’s financial year is not coterminous with the tax year, when do we become eligible?

The GASDS is based on tax years, not on calendar years or any other 12 month period, such as the accounting period of your charity. You must use tax years (6 April one year to 5 April the next year) when you consider:

  • the eligibility conditions to see if your charity or CASC is entitled to top-up payments
  • the donations received
  • making a claim under the scheme

Can my donors claim tax back higher rate tax under the GASDS?

No. GASDS is not a tax relief, so higher and additional rate taxpayers will not be able to claim tax relief on their GASDS donations.

Can I claim for small donations received before 06 April 2013?

No. The scheme applies only to small cash donations received on or after 6 April 2013, so any donations received by your charity or CASC before 5 April 2013 will not qualify under the GASDS.

Click here for further guidance and information from the HMRC website. Click here to see worked examples of how the scheme operates in practice.