On 6 April 2017 some of the rules for the Gift Aid Small Donations Scheme (GASDS) were changed. HMRC guidance relating to small donations that were collected on or after 6 April 2017 can be read here and are summarised below. Different rules that apply to donations collected before 6 April 2017.

Charities which receive small cash donations of £30 or less are able to apply for a ‘Gift Aid style’ repayment without the need to obtain Gift Aid declarations for those donations. The amount of small donations on which the repayment can be claimed is capped at £8,000, or ten times the amount of donations on which it claims Gift Aid in the tax year.

The scheme applies to donations collected and banked in the UK. Payments under the scheme are not repayments of tax but are funded from public expenditure

Claims are based on a tax year irrespective of the structure (corporate or otherwise) of the charity and must be made within one year of the end of the tax year in which the small donations are collected. Donations must be pure gifts, although small tokens of negligible value such as lapel stickers will be allowed. The donations must be in cash or contactless payments (not by cheque or chip and pin card donations) and collected and banked in the UK.

Higher rate tax relief will not be available to donors. Gifts made under Gift Aid or Payroll Giving are not eligible, nor are donations used for non-charitable or non-qualifying purposes, or for membership subscriptions.

Charities and CASCs can now make a claim for a top-up payment on eligible small donations without needing to:

• have been registered as a CASC or established as a charity for tax purposes for at least the 2 previous complete tax years
• have made a successful Gift Aid claim in at least 2 of the previous 4 tax years

The charity must not have incurred a penalty in respect of a Gift Aid or GASDS claim: if it does, it will not be eligible to claim under GASDS in the tax year in which the penalty arose, or the following tax year.

A charity must make Gift Aid claims on donations received in the same tax year in order to make a claim to a top-up payment under the GASDS. The total Gift Aid donations must be at least 10% of the small donations on which top-up payments are claimed (this is known as the matching rule).

There are special rules in certain circumstances to increase the maximum amount of small donations on which top-up payments can be claimed by some charities. If a charity (not a CASC) runs charitable activities in a community building, the maximum limit is increased from £8,000 of small donations by up to a further £8,000 for small donations collected in each community building. There are a number of detailed requirements to qualify for this additional relief which are set out on the HMRC website.

Charities that are connected with one another will share between them the maximum £8,000 limit on which small donations may be claimed. However, the additional allowance due to a connected charity that runs charitable activities in a community building will not be affected.

Claims under GASDS must be made using the Charities Online system for Gift Aid.