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Home News list Small charity donations to qualify for top-up payments

Small charity donations to qualify for top-up payments

10 May 2012

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

From April 2012, the Gift Aid Small Donations Scheme will allow charities 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.

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.

The final policy is under consultation until May 25th. You can add your views here.

The following is our response to the proposals:

Community Matters supports the fuller response being made by the Charity Finance Group, but wishes to highlight the following concerns:

1.    The process proposed seems highly complex and one that many small organisations may be put-off from using, potentially making the initiative the exclusive preserve of larger charities

2.    In our view, the restriction on eligible organisations (ie those with a good track record of claiming gift aid) unfairly excludes new organisations or those that are considering gift aid for the first time

3.    There seems to be a strong focus on preventing abuse, the tone of which appears to conflict with the Government’s stated objective of encouraging the use of gift aid

4.    We are not clear about the intention of paragraph 5.10. Community Matters members are Community Associations, which are local umbrella charities and may have a number of community groups or sections operating under their name and charity number. Donations are likely to be directed at the different community groups and to prevent these groups breaking apart, Community Matters would urge that each group or section of the community association should have its own allocation of £5,000, (or £10,000 if operating within a community building).

5.    We welcome the additional relief proposed for donations collected in community buildings as this may help to offset the loss of income for community premises across the country. In particular:

a.    We think that the definition of a community building in paragraph 5.18 may prove too limited. The Government’s asset transfer agenda and Community Right to Bid will enable charities to take over everything from toilet blocks to beaches and piers and these may be the only community spaces available in some areas, particularly those where the local authority has closed its own community buildings. We also think that eligibility should include Council owned premises and privately owned premises where there has been a tradition of community use of those spaces

b.    We would urge that the proposed additional relief should apply to all relevant community buildings, including those where the proportion of charitable activity is lower than the 95% qualifying limit for vat relief on construction, for example, (accepting that donations for non-charitable purposes would not be eligible for top up payment). The Government’s encouragement to communities/community buildings to take on the delivery of public services and to develop social enterprises in order to become sustainable means that many community buildings now operate a mix of charitable and non-charitable activities.

c.    We would urge that the phrase ‘in the community building’ (paragraph 5.14), mean the whole space (including the grounds or external space) occupied by the charity.  

d.    The limitation of 10 group members excluding trustees and staff may unfairly exclude the very smallest community buildings/organisations, particular those in small rural communities


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