Quick guide: The Small Charities Donation Bill

Quick guide: the small charities donation bill

The idea behind the Small Charitable Donations Bill is to allow charities and Community Amateur Sports Clubs (CASCs) to claim Gift Aid-style payment on small cash donations up to £20 where it is often difficult to obtain a Gift Aid declaration.

Generally, eligible charities and CASCs can now claim top-up payments on up to £5,000 of small donations a year.

According to Treasury figures, 16,000 charities will benefit from the Small Charitable Donations Bill. Changes made to the scheme in November 2012 will ensure that even more charities will gain from it. The changes include reducing the qualifying period for charities to use the scheme (from three to two years of successful Gift Aid claims) and reducing the matching requirement (charities will now only need to have claimed £1 in Gift Aid to claim £10 through the small donations scheme).

The top-up payment is used in the same way as Gift Aid; where the basic rate of income tax is 20%, small donation income of £5,000 will entitle the charity or CASC to a top-up payment of £1,250. The aim is to provide charities which have less capacity to claim Gift Aid with an additional income stream. This boost could generate almost £130m a year for the sector by 2018.

If your charity is registered with HMRC for Gift Aid and you have a three-year track record of using Gift Aid, your charity is likely to benefit from the Small Charitable Donations Bill.

Meanwhile, a new service, Charities Online, is being introduced in response to feedback. Since 22 April 2013, charities and CASCs can sign up to make repayment claims electronically. As well as saving money on postal costs, claiming online is faster and prevents delays. Other benefits include:

  • Claims will no longer be returned for correction; the built-in checks will ensure you are informed of any mistakes before a claim is submitted. 
  • Peace of mind is given after a claim is submitted, in the form of an on-screen confirmation reference number as acknowledgement. Another acknowledgement is given once the payment has been made into your charity's bank account, as well as written confirmation in the post. 
  • Some parts of the way you make your claim have been renamed, making the process easier to understand and digest. 
  • Gift Aid records for sponsored events are now more straightforward; all donations can be put as one entry under the name of that participant. This means that now you do not need to list every individual donor.

For more information about Charities Online, visit the HMRC website.

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