The process for claiming Gift Aid should be reformed, simplifying the system’s administration and allowing tax relief on all the donations a charity receives, according to a coalition of third sector bodies.

The coalition, acting in response to the Treasury’s Gift Aid consultation, consists of Acevo, the CFDG, the Charity Tax Group, the Church of England, the Institute of Fundraising and the NCVO. While each of the bodies in question submitted there own recommendations to the consultation, which closed on 30 September, they said they were united in the core belief of simplification.

This would equate to an appropriate tax reclaim rate being calculated as a percentage of a charity’s level of voluntary income as reported in its accounts. The rate, said the coalition, would take account of the tax paying status of the cross section of the general public who give to charity. This would do away with the heavy bureaucratic burden – and thousands of bits of paper - currently associated with claiming back Gift Aid.

Institute of Fundraising chief executive Lindsay Boswell said: “Government is always calling on the sector to speak with one voice – in so doing, we are spelling out the key way in which our sector could benefit from a reformed Gift Aid system. A simple Gift Aid system is key to successful fundraising, and this response reflects our members’ views.”

The coalition said that it estimated the new system would result in some £400 million a year extra for charities, representing better delivery of what the original laws around Gift Aid intended, while making the entire process easier for all involved.

Helen Donoghue, director of the Charity Tax Group, said that the proposed simplified system would result in better take-up of Gift Aid, especially among small and medium-sized charities. “Consultations with our members indicate that many such charities have been put off by the administrative bureaucracy in the existing scheme,” she added.

In addition, the Association of Charity Shops has called for Gift Aid to be extended to goods donated to charity shops, with tax reclaimable on the value realised just as for cash donations.

The coalition also said that while concerns over a reduction in Gift Aid next year, when the basic rate of tax is decreased, would be addressed, this did not form part of its current recommendations.