By Andrew Holt

The Charities Aid Foundation (CAF) has called on the Government to introduce a complete overhaul of the Gift Aid scheme.

Responding to today’s publication of the Small Donations Bill, CAF said the Government’s proposals fell short of the action needed to bring Gift Aid into the 21st century.

CAF Head of Policy Hannah Terrey said: “It is good that the Government recognises that Gift Aid is too complicated, but the proposals it has published today are far too complex and unlikely to have a major impact on charity fundraising, particularly for small charities.

“The current Gift Aid scheme is outdated and needs to be simplified for donors and charities. We need a complete overhaul of Gift Aid to ensure it is fit for fundraising in the age of the internet and the Smartphone. We think a single Gift Aid registration scheme, based online, would cut form-filling and increase charities’ incomes by hundreds of millions a year.”

Under proposals contained in the Small Donations Bill, charities already making Gift Aid claims would be able to benefit from top-up payments through the Gift Aid Small Donations Scheme.

Charities will be able to claim an extra 25% on donations of £20 or less (up to a total of £5,000 in donations).

The Charity Tax Group reinforced this view. CTG Chairman, John Hemming commented: “We welcome the publication of this Bill which gives charities the chance to receive a ‘Gift Aid style’ payment on small cash donations that would otherwise be outside the Gift Aid system.

"Although the legislation is more complex than the sector had hoped, it reflects HMRC’s efforts to accommodate charities in the scheme irrespective of how they are structured. CTG welcomes HMRC’s willingness to adapt the scheme based on feedback from the sector and looks forward to continued engagement on the scheme following its implementation”.

Though HM Revenue & Customs said charities will be able to claim top-up payments on up to £5,000 of small donations without needing Gift Aid declarations, under changes in the Bill before Parliament today.

HMRC says the Small Charitable Donations Bill aims to enable charities and Community Amateur Sports Clubs (CASCs) to claim a Gift Aid-style payment on small donations where it is difficult to get a Gift Aid declaration. It will be known as the Gift Aid Small Donations Scheme (GASDS).

Charities and CASCs will be able to claim a top-up payment on small donations of up to £20. Qualifying charities and CASCs will be able to claim up to £1,250 in repayment.

Chloe Smith, economic secretary to the Treasury, said: “The Government is committed to encouraging charitable giving and building a more socially conscious society. Key to this is building a stronger culture of giving. The proposals in this Bill are part of that drive.

“The scheme will particularly help small charities that rely on bucket collections, where it is impractical to get the paperwork required under Gift Aid. They will now be able to claim a Gift Aid-style payment on small donations without the need to collect donors’ details.

“The Gift Aid Small Donations Scheme will boost the income of charities, unlocking around £100m more funding for charities a year by 2015-16.”

Charities will be able to claim the Gift Aid-style top-up payments from HM Revenue and Customs (HMRC) from April 2013.

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