Gift Aid is a scheme implemented by Her Majesty's Revenue and Customs (HMRC) that allows charities and Community Amateur Sports Clubs (CASCs) the opportunity to claim 25% more on eligible donations made by UK taxpaying citizens. Unfortunately, this ability to claim is limited to donations over £30. This is where GASD comes in.

What is the Gift Aid Small Donations Scheme?

The Gift Aid Small Donations Scheme (GASDs) is a derivative of the Gift Aid Donation Scheme, where HMRC allows charities and CASCs to claim 25% more on specific types of donations, which may not be eligible for a standard Gift Aid claim.

Gift Aid small donations are characteristically donations made that are £30 or less. These usually take the form of small cash donations, contactless card donations or cash collected in boxes at charities or churches.

What is a small donation?

A small donation is a contactless or cash payment made to a charity in person that is £30 or less. But donations are not always that simple! A common concern about GASD is whether or not accumulated small donations qualify as such or whether they are considered one larger donation. A statement from HMRC aptly answers this concern:

"The decision over what constitutes an eligible donation is one for the church/charity to make for themselves, rather than for HMRC, but the conditions for something to be considered a 'small donation' are clearly set out in legislation. Where it is the case, for example, of separate donations being given in a single envelope, then if the church/charity official is happy these are clearly separate 'small donations' (and clearly stated as such) then they will be eligible for GASDS, as is the case where separate envelopes are used".

As evident above, HMRC is usually happy when charities practice transparent record-keeping regarding how contributions are received, as evidence for the classification of donations.

For example, if a church member regularly gives £10 to the church every week in a separate envelope, the church would be able to make GASDs claims on each of the £10 donations. This equates to £40 in total, plus 25% equaling a total of £50.

However, if the member decides to attend only once a month (to limit physical contact) and donates the entire £40 at once in one envelope. Then, it will not be eligible for a GASDs claim, and the charity or CASC would require the donor to complete a gift aid declaration for the donation to qualify for regular Gift Aid.

Do Gift Aid Small Donations affect my tax?

One of the rules with regular Gift Aid is that the donor needs to have paid at least the extra amount being claimed by the charity in tax during that year. The interesting thing about Gift Aid Small Donations is that they do not require a declaration, so identification of the donator is not mandatory.

This means that individuals who are worried that they may not have paid sufficient tax will be able to give gift aid-eligible donations without concern about the amount of tax they have already paid. And the charity or CASC still gets to claim that extra 25% from HMRC.

How much can a charity claim on GASDs?

Charities can claim GASD payments on donations up to but not exceeding £8,000 for that tax year. This means that the maximum amount a charity can receive from GASD claims in a year is £2,000 (25% of £8,000 total).

However, if the charity owns properties, not in the same council area, the charity can claim on GASDs at an extra limit of £8,000 of donations per building. Check out this article on how much Gift Aid is worth to charities for further details on the ins and outs.

What does a charity need to claim on GASDs?

• The charity or community amateur sports club must be a registered charity that has registered for Gift Aid.
• The funds must be cash or contactless in nature.
• The funds must be collected and banked in the UK.
• The funds have to clearly qualify as a small donation.
• The charity must have claimed regular Gift Aid in the same tax year as the GASD claim
• The charity may not have a penalty within the past 24 months
• The amount claimed on GASDs may not be more than 10 times the amount claimed from Gift Aid that year. For example, if £10 is the amount claimed on Gift Aid, the charity can claim a maximum of £100 on GASDs.
• All GASD claims must be made within 24 months from the end of the same tax year during which the donations were collected.

To remain compliant with HMRC regulations, charities must keep a record of all received donations. This includes how much money was collected, the date, contactless payment receipts, and confirmation that no donations were above £30.

If recording collection box donations in community buildings, a record also needs to be kept of the address, the type of event held, the estimated number of people attending each event, and the number of events held.

What types of payments are not eligible for GASD claims?

• Donations over £30
• Membership fees
• Donations from companies or trusts
• Tickets or fund-raising activities

How to claim for GASDs?

To claim on GASDs, charities need to have claimed gift aid in that tax year. To find out how to claim gift aid, you can check out this article on how to claim gift aid. (Linking opportunity for "How to Claim Gift Aid")

GASDs are not included as part of the regular gift aid claim schedule, but the process is almost identical. The same spreadsheet can be used for GASDs claims but needs to be submitted separately.

Is the GASD scheme stable?

It is important to note that donations are only eligible for GASD claims if they are physical cash donations or in-person contactless donations. Online donations do not qualify for such claims.

The consequences of this parameter were strongly evident in the recent statistics published by HMRC, which show a 25% decline in GASD giving since the start of the COVID-19 pandemic.

However, while small donation giving was down substantially, overall Gift Aid donations only suffered a 1% drop. The increase in online transactions could be due to the convenience and safety when adhering to social and physical distancing precautions.

The fact that the general rate of giving remained relatively stable over that period suggests that there was merely a change in the nature of giving rather than a reduction in donations.

While charities and CASCs still benefit from the generosity of their donors when they choose to give in this way, they will only receive the original amount and not be able to claim an extra 25% from HMRC through Gift Aid if the contribution is less than £30.

What should I do now?

If you'd like to know more about the regular Gift Aid Donations Scheme, check out our article that discusses how Gift Aid affects tax and explains how you can benefit financially through tax relief by giving to charity.

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