The start of the new tax year sees a number of new tax rules implemented.

Significant changes have been made to the Gift Aid Small Donations Scheme (GASDS) following a year-long consultation process while new rules relating to Gift Aid and intermediaries and off payroll working are now in force and the Apprenticeship Levy begins this month.

CTG Chairman, John Hemming, said:

“In respect of the Gift Aid Small Donations Scheme (GASDS) the relaxation of the eligibility requirements, clarification of the community buildings rules and extension to contactless payments are all welcome and we hope that these changes will help to widen accessibility to the Scheme, particularly among 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. 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.

“The other tax changes introduced today do little to address concerns about the overall complexity of the tax system for charities and there is a real risk that new burdens such as the Apprenticeship Levy, alongside the forthcoming increase in IPT and continued irrecoverable VAT costs, will begin to undermine the charities’ operational effectiveness. 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. 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.”

Notes to editors

Provisions in the Small Charitable Donations Act 2017 will be effective from 6 April 2017. The Act changes the Gift Aid Small Donations Scheme by:

• completely removing the two-year eligibility rule and the Gift Aid history requirement (two-in-four rule) to allow more smaller and newer charities to benefit sooner
• ensures the scheme continues to reflect the realities of modern fundraising by allowing contactless donations to be eligible
• providing that charities – or a group of charities – may claim under the main allowance or under the community buildings allowance, but not both (which 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)
• reforming the community buildings rules to allow donations received outside of the community building but within the same local authority area to qualify – allowing more charities to benefit from the important work they carry out in their local communities.

HMRC’s entry level guidance note and detailed guidance note have also been updated, following consultation with CTG and other sector bodies.

The following tax changes, relevant to charities, are also effective from 6 April 2017:

• New Off-payroll working rules for public sector employers come into force
• Apprenticeship Levy payments will be collected by HMRC via PAYE from April
• Provisions in the Donations to Charity (Gift Aid Declarations) Regulations 2016  affecting Gift Aid and intermediaries will be effective
• The Social Investment Tax Relief will be enlarged
• Benefits-in-kind provided under a salary-sacrifice scheme to be limited in many cases
• Introduction of a new penalty on those individuals or entities who enable the use of tax avoidance arrangements which HMRC later defeats (‘enablers’)

About us

The Charity Tax Group (CTG) has over 500 members of all sizes representing all types of charitable activity. It was set up in 1982 to make representations to Government on charity taxation and it has since become the leading voice for the sector on this issue.

For further information and comment please contact 02072221265 or info@charitytaxgroup.org.uk.

CTG’s recently published 2016-17 Annual Review can be read here.