An umbrella group has welcomed changes to the Gift Aid Small Donations Scheme coming into force today, while calling for ongoing review of the tax regime to reduce the burden on charities.

Charity Tax Group said the new tax year brings changes to the GASDS including removal of the two-year eligibility rule and the Gift Aid history requirement to allow more smaller and newer charities to benefit sooner. Changes also allow contactless donations to be eligible.

Changes to the GASDS mean charities – or a group of charities – can claim under the main allowance or under the community buildings allowance, but not both. CTG said this means that where there are connected charities it will no longer be possible for one of them to claim under the main allowance and another to claim under the community buildings provisions.

The changes reform the community buildings rules to allow donations received outside of the community building but within the same local authority area to qualify, CTG said, allowing more charities to benefit from the work they carry out in their local communities.

CTG chair John Hemming said the eligibility requirements, clarification of the community buildings rules and extension to contactless payments are all welcome, and the group hopes these changes will help to widen accessibility to the scheme - in particular for smaller charities.

“However, we encourage the Government to continue to review the effectiveness of these changes, and consider further reforms, if there is no significant additional take-up,” Hemming said. “The charity sector will work hard to ensure that it maximises the value of this important relief and CTG will work with others in the sector and Government to promote the scheme as much as possible.”

In addition to the GASDS changes, new off-payroll working rules for public sector employers come into force today, while Apprenticeship Levy payments will be collected by HMRC via PAYE from this month.

New provisions affecting Gift Aid and intermediaries are effective from today, and Social Investment Tax Relief will be enlarged.

Benefits-in-kind provided under a salary-sacrifice scheme are to be limited in many cases, CTG said, and a new penalty is introduced for individuals or entities who enable the use of tax avoidance arrangements which HMRC later defeats.

Hemming said the other changes introduced alongside GASDS amendments today “do little to address concerns about the overall complexity of the tax system for charities”.

The Apprenticeship Levy and a forthcoming increase in insurance premium tax and continued irrecoverable VAT costs risk undermining charities’ operational effectiveness, Hemming said.

“We therefore welcome the commitment by the Financial Secretary to the Treasury at the recent CTG Tax Conference that the Government would be forming a working group to assess the cumulative impact of taxation on charities and the requirements for further reform and simplification,” he said. “To echo the Minister’s words, ‘charities must be at the top table on tax issues’ if we are to ensure a fair and proportionate system is in place.”

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