On 6 April 2017 some of the rules for the Gift Aid Small Donations Scheme (GASDS) were changed.
This guidance relates to small donations that were collected on or after 6 April 2017.
Different rules that apply to donations collected before 6 April 2017.
Chapter 8.1: Eligibility conditions
If your charity or Community Amateur Sports Club (CASC) is eligible you may be able to claim a top-up payment on small cash or contactless donations under GASDS.
If your charity or CASC is eligible for a top-up payment you’ll need to work out how much you can claim.
Factors that affect the amount you can claim include:
- the basic rate of income tax
- the amount of eligible small donations collected
- the cap on the amount of GASDS top-up you can claim
- how much Gift Aid you have claimed in that tax year, sometimes called the ’matching rule’
- whether your charity or CASC is connected to another charity or CASC
For further information about these factors, see chapter 8.2 of this guidance.
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
You can’t claim under the GASDS for 2 tax years if your charity or CASC receives a penalty relating to Gift Aid or a GASDS claim under Schedule 24 Finance Act 2007 or the Small Charitable Donations Regulations 2013.
For example, a charity charged a penalty on the Gift Aid claim on donations collected in tax year 2017 to 2018 couldn’t claim under GASDS until tax year 2019 to 2020.
If a penalty has been suspended or overturned on appeal it won’t count, and you can still claim under GASDS as long as the other conditions are met.
Charities and CASCs are still able to make Gift Aid claims if they’ve been charged a penalty.
Chapter 8.2: The amount you can claim
There are a number of factors which affect how much you can claim under the GASDS rules. It’s important to read through all of the guidance in this chapter 8.3 to make sure that you claim the correct amount.
The basic rate of income tax in that tax year
The amount of GASDS top-up payment available can change depending on what the basic rate of income tax is – on 6 April 2017 it was 20%.
To work out the amount you can claim:
- Start with the total amount of small donations collected (for example, £200).
- Take the per cent amount of the basic rate of income tax away from 100 (for example, 100 minus 20 which gives 80).
- Divide the per cent amount of the basic rate of income tax by the result of step 2 (for example, 20 divided by 80 which gives 0.25).
- Multiply the result from step 3 by the total amount of small donations collected from step 1 (£200 multiplied by 0.25 which gives £50).
While the BRT is 20% you can work out the top-up payment quickly by multiplying the amount of eligible small donations by 0.25.
For example, the top-up payment for small donations of £1,000 would be £250 (£1000 x 0.25).
Reasonable steps to check donations are eligible
It won’t always be obvious whether a donation is £20 or less when making a claim. For example, in a church collection an individual could donate £30 in £10 notes without the person organising the collection noticing.
Donations will be eligible as long as the managers of the charity or CASC have taken reasonable steps to apply the £20 limit.
Reasonable steps for ensuring donations are eligible include:
- giving instructions to all collectors to record any donations greater than £20 so that they can be excluded from the GASDS claim
- not including £50 notes in a GASDS claim
- excluding cash donations known to be from non-individuals (for example, a company or trust)
- excluding any donations collected or banked outside of the UK
- claiming under Gift Aid rather than GASDS when it’s known that a donor has completed a Gift Aid declaration for their donation
- claiming Gift Aid on donations received in Gift Aid envelopes
- excluding donations where the donor or someone connected to them has received a benefit from you as a result (gifts with negligible value such as a lapel sticker are allowed)
- excluding membership fees as they are not small donations for GASDS purposes
The cap on the amount of GASDS top-up you can claim
For both charities and CASCs, the maximum donations limit is £8,000 per tax year. This limit applies to eligible small donations collected anywhere in the UK.
Charities can choose whether to claim top-up payments on one of either:
- up to £8,000 on donations collected anywhere in the UK
- up to £8,000 for each community building, under the new community buildings rules
CASCs can only claim under GASDS on donations collected anywhere in the UK because they cannot claim under the community building rules.
Charities claiming under the community building rules can collect donations at any time (not just during charitable activities) as long as:
- the building qualifies as a community building
- the donations are collected in the same Local Authority area as a community building
Under the community building rules a charity can claim on a maximum of £8,000 of eligible donations per community building.
Your charity will need to decide which of the two options would give the best result each tax year before submitting your claim.
If you claim using an option which does not give the best result for that tax year you would need to amend your claim if you wanted to change.
It is advisable to think about which option will be best for your charity before you submit your first claim for that tax year.
A charity has one community building. During tax year 2017 to 2018 it collects £10,000 in small donations. This charity can only claim top-up payments on donations up to £8,000 collected anywhere in the UK.
A charity has 2 community buildings. During the 2017 to 2018 tax year it collected £10,500 as follows:
- £2,000 in the Local Authority area of building A
- £1,500 in the Local Authority area of building B
- £7,000 outside of the Local Authority area of these buildings
This charity is better off claiming a single £8,000 allowance on small donations collected anywhere inside the UK.
If this charity had claimed under the community buildings rules they could only claim a top-up payment on £3,500 – the total amount of donations collected inside their community buildings.
A charity has 3 community buildings which are each in different Local Authority areas. This means that the charity could claim top-up payments on donations up to £8,000 for each building or £8,000 in total if collecting anywhere inside the UK.
During the tax year it collects:
- £3,000 in the Local Authority area of building A
- £2,000 in the Local Authority area of building B
- £9,000 in the Local Authority area of building C
- £2,500 outside of the Local Authority areas of its buildings
This charity is better off claiming under the community buildings rules because this allows them to claim top up payments on:
- £3,000 collected in the Local Authority area of building A
- £2,000 collected in the Local Authority area of building B
- £8,000 collected in the Local Authority area of building C
This is £5,000 more than they could have claimed if they had chosen the single £8,000 limit for donations collected anywhere in the UK.
You should read the community buildings guidance in chapter 8.5 before deciding which method would benefit the charity the most.
Once you’ve submitted your first GASDS claim for a tax year, you can’t easily switch to the other method of claiming.
Amending your GASDS claim
If you need to amend your claim, you must contact HMRC in writing and include:
- your name
- your address
- your contact details
- your charity reference number
- the details of any claims made in the relevant tax year
- the amendments you’d like to make
You may also need to resubmit new claims for that tax year online.
The time limit for amending claims is 12 months from the date you made the claim you want to amend.
How much Gift Aid you have claimed in that year – the ‘matching rule’
The amount of GASDS top-up you can claim also depends on the amount of Gift Aid donations that you have received and successfully claimed on in that tax year.
The maximum amount of GASDS top up you can claim is 10 times the total amount of Gift Aid donations claimed on by the charity or CASC in that tax year.
For example, to claim a top-up payment on £100 of small donations you need to successfully claim Gift Aid on at least £10 of eligible donations in the same tax year.
You can only match GASDS donations to Gift Aid donations made in the same tax year. It is the tax year the donation was actually made, not the year you claim Gift Aid which matters.
GASDS is always worked out on a tax year basis, so the Gift Aid donations to be taken into account must also be considered on a tax year basis, even if the charity or CASC has an accounting year that is different from the tax year.
You must consider what tax year the Gift Aid donation was actually made to the charity.
A charity submits a claim in 2016/17 for the following donations which are all eligible for Gift Aid:
- £300 in tax year 2014 to 2015
- £50 in tax year 2015 2016
- £100 in tax year 2016 2017
This charity will only be able to claim GASDS top-ups on a maximum of £1000 in small donations in tax year 2016 to 2017. This is worked out by multiplying the £100 Gift Aid donation in tax year 2016 to 2017 by 10. The amounts on the Gift Aid claim which were collected in earlier tax years do not count.
If you only make Gift Aid claims through a collection agent you will need to tell HMRC:
- who the agent was
- how much the claims were for
- when they were made
If you’re filling in the claim online, provide this information in the space on the declaration page.
If you’re using a paper form, use the space in box 38.
Connected charities and CASCs
If your charity or CASC is connected to another charity or CASC, you should read chapter 8.7 of this guidance.
Charities and CASCs are connected at any time during a tax year where both:
- the same person (or connected persons) has control over those charities
- the charities or CASCs have the same(or very similar) purposes
A connected person is defined in section 993 of the Income Tax Act 2007 (ITA 2007).
There are special rules for connected charities which can affect how much you are entitled to claim, so it’s important that you read this guidance before making a claim.
Chapter 8.4: Administration
The rules for making and administering claims under GASDS are set out in the Small Charitable Donations Regulations 2013 (as amended in 2017).
The rules for claims, amendments to claims, overpayments, enquiries and information powers are the same as apply to Gift Aid claims except:
- all claims for GASDS must be made on a tax year basis, not the accounting period of the charity or CASC
- charities or CASCs must make a claim for top-up payments within two years of the end of the tax year in which the donation is received
Claims must be made online using the Charities Online process that is also used for claiming Gift Aid.
If you want to claim GASDs top up payments you need to keep sufficient records to support your claims.
What records you need to keep is a matter for you, but you should be able to show that:
- your charity or CASC collected the small donations in the UK and kept records to confirm this
- your charity or CASC banked any cash donations in a UK branch of a bank or other relevant institution, for example a building society
- cash was banked in an account held in the name of or on behalf of the charity or CASC
- contactless donations were credited into a UK bank account held in the name of or on behalf of the charity
- you kept any records of contactless donations produced by the contactless terminal so that you can monitor for any ’multiple donations’ from the same person
- you can identify how much was collected on each contactless terminal so that you can work out how much was collected in a particular Local Authority area
- you’ve kept a record of the denomination of all notes received (£5, £10, £20) and have removed any £50 notes which are above the £20 limit
It is important that small cash donations are banked if your charity or CASC wants to claim a GASDS top-up.
If your charity or CASC uses small cash donations to pay for expenses without banking the donations first you won’t be able to claim a top-up payment.
It’s also a good idea to provide fundraisers with bank giro credit forms so that they can pay any amounts collected directly into the charity account. The counterfoil receipt which notes the breakdown of the coins and notes collected should then be given to the charity for audit purposes.
If your charity wants to claim GASDs top up payments based on amounts collected in a Local Authority Area near a community building, you must also keep a record of:
- the address of the community building
- a record to show that the building qualified as a community building
- the date(s) that the money was collected
- the location(s) that the money was collected - this should include full address and postcode
- which community building the donations will be allocated to for the purposes of the GASDS claim
Chapter 8.5: Community buildings
A community building is a building (or part of a building) which a charity uses to run charitable activities.
These charitable activities must host 10 or more beneficiaries at least 6 times during the tax year.
To qualify as a community building a building (or part of a building) must meet the following conditions:
- your charity must carry out charitable activities in a community building for a group of at least 10 beneficiaries at the same time
- the beneficiaries do not need to be the same 10 people each time
- activities must be group activities - 10 beneficiaries being counselled on a one to one basis in 10 separate rooms would not be eligible
- beneficiaries must not be charged for access to the part of the community building where the charitable activity takes place
- the charitable activity must also be open to members of the general public (or a section of the public)
- activities must be run in the building on at least 6 occasions each tax year
For example, the building used by a charity running a school would be unlikely to qualify as a community building unless children who aren’t pupils of the school can join in freely with the charitable activity.
In some cases employees and volunteers will count as beneficiaries of the charity for example, at a religious service.
However, in other cases they will not count as a beneficiary. For example, a social worker facilitating a self-help group would not be considered a beneficiary of the charity.
Examples of buildings that can be community buildings include:
- village halls
- scout huts
A building cannot be a community building if the building (or parts of it) is used wholly or mainly for residential purposes or the sale or supply of goods unless the charity is using part of that building exclusively to carry out a charitable activity.
Charities do not need to own a building for it to qualify as a community building.
The function room of a hotel could be a community building for a support group if the group met there at least 6 times each year to deliver charitable activities to 10 or more beneficiaries, provided the room was used exclusively by the group.
If the group meets in one part of a room and the rest of the room is used by other members of the public then the room won’t qualify as a community building.
Examples of buildings which are not community buildings include:
- charity shops
- residential care homes
Two or more buildings on the same or adjacent land are treated as a single building where the same person or organisation holds a freehold or leasehold interest in the land.
Claim limits and community buildings
Charities can no longer claim a top-up payment on donations of up to £8,000 per charity plus an additional £8,000 of small donations for each community building they operate from.
The new rules are set out below and will apply to all donations collected on or after 6 April 2017.
CASCs and charities with fewer than 2 community buildings
Charities with fewer than 2 community buildings can only claim under GASDS on a maximum of £8,000 of eligible small donations each tax year that are collected anywhere in the UK.
CASCs don’t have community buildings, so must claim in the same way.
Charities with 2 or more community buildings
Charities with 2 or more community buildings should claim either:
- a top-up payment on donations of up to £8,000 collected in each community building
- a top-up payment on donations of up to £8,000 collected anywhere in the UK
If you choose to claim top-up payments for each community building, then only small donations collected in the same Local Authority area will be eligible for top-up payments.
Chapter 8.6: Local Authority areas
Local Authority areas are defined differently across the UK.
Local Authority areas in England
In England, a Local Area authority is a district council, a county council if there is no district council, a London borough council, the Common Council of the City of London or the Council of the Isles of Scilly.
For the purposes of the Local Authority Area rules the Inner and Middle Temple are treated as if they are located within the area of the Common Council of the City of London.
Local Authority areas in Scotland
In Scotland, a Local Area authority is a council constituted under section 3 of the Local Government etc. (Scotland) Act 1994.
Local Authority areas in Wales
In Wales, a Local Area authority is a county council or a county borough council.
Local Authority areas in Northern Ireland
In Northern Ireland, a Local Area authority is a district council constituted under section 1 of the Local Government Act (Northern Ireland) 1972.
Donations collected in Local Authority areas
You can claim top-up payments on small donations collected anywhere in the same Local Authority area as a community building. You don’t need to hold a charitable event – the donations can be collected at any time.
These donations are collected under the community buildings rules.
If you’d like to claim under GASDS in this way, you must keep additional records that show:
- the address and postcode of where the donations were collected
- that this location is in the same Local Authority area as the community building
If your charity has collected eligible small donations in a Local Authority area where the charity has more than one community building, you can choose which building to allocate the donations to.
The only exception to this is when donations are collected inside a community building. When this happens, you can only allocate these donations to the building they were collected in.
A charity has 3 community buildings in a Local Authority area. During the tax year the charity collected £15,000 in eligible small donations inside this Local Authority Area.
£4,000 was collected inside of one community building and therefore the charity can only allocate the £4,000 to that particular building.
The remaining £11,000 was collected outside of the community buildings and can be allocated to the 3 buildings in any way of the charities choosing, as long as the amount allocated to each community building does not exceed £8,000.
If your charity has collected more small donations in a Local Authority area than it can claim under the £8,000 per building limit you won’t be able to claim a GASDS top-up on the amounts collected over the £8,000 per building limit because these extra donations cannot be claimed under a community building outside of the Local Authority area.
A charity has 2 community buildings in a Local Authority area A and one building in Local Authority area B.
The charity collected:
- £20,000 of eligible small donations in area A
- £2,000 of eligible small donations in area B
The charity can claim a GASDS top-up on donations totalling £16,000 in area A (£8,000 of donations per building in area A) and £2,000 of donations allocated to the building in area B.
The £4,000 collected in area A which exceeds the £8,000 per building limit could not be transferred to area B and no GASDS top-up could be claimed on these donations.
A small donation cannot be counted as part of the community building amount for more than one community building.
Chapter 8.7: Connected charities and CASCs
If a charity or CASC is connected to one or more other charities or CASCs this will affect the amount of GASDS top-up that you can claim.
All references to charities in this chapter also apply to CASCs. Charities and CASCs are generally connected where one or more of the following applies:
- one charity controls another
- two or more charities are under common control
- control links a number of charities - for example, if Charity A controls Charity B and Charity B controls Charity C, then all 3 charities are connected
If 2 charities are connected but they have purposes and activities which are not substantially the same, then they will not be a connected charity under GASDS rules.
- a primary school and a nursery both provide education for children and have purposes and activities which are substantially the same
- a school, a zoo and a museum all provide education for children but their activities are sufficiently different and would not be connected under CASC rules
Chapter 8.8: Controlling persons
There are different definitions of controlling persons of charities and CASCs, and of charitable trusts.
Controlling persons of charitable companies or CASCs
A person has control of a charitable company or CASC if they have control:
- over the affairs of the company
- through voting power
- through share capital or through issued share capital
- over the income or assets of the company
Controlling persons of charitable trusts
A person has control of a charitable trust if:
- the person is a trustee of the charity and some or all of the powers of the trustees of the charity could be exercised by that person alone, or by that person acting together with any other persons who are trustees of the charity and who are connected with the person
- the person, alone or together with other persons, has power to appoint or remove a trustee of the charity
- the person, alone or together with other persons, has any power of approval or direction in relation to the carrying out by the trustees of any of their functions in administering a charity
If two or more charitable trusts have the same (or very similar) purpose, then they can be classed as connected if at least half of the trustees of each trust are:
- the same people
- persons connected to the trustees of the other charity
- a combination of the two
Chapter 8.9: Claim limits
If one or more connected charities have a community building, then they can only claim a top-up payment under the community building rules and can’t share the £8,000 allowance.
Claim limits for connected charities that run charitable events in community buildings
When one or more charities in the group have a community building then all of the connected charities should claim GASDS under the community building rules.
Under the community building rules all eligible small donations must be collected in the same Local Authority area as the community building they are claimed under.
The only exception is if the group of connected charities agree to make an election to HMRC.
An election tells HMRC that they would like to share a single £8,000 limit for donations collected anywhere in the UK instead of claiming under the community building rules.
This may happen in rare cases when a group of connected charities work out that they are better off sharing a single £8,000 limit as it can be used on eligible donations collected anywhere in the UK.
This is only likely to happen if together the group of charities collect most of their small donations outside of the Local Authority area of any community buildings they have.
In most cases connected charities will not want to make this election because although one or a few charities may benefit, the organisation as a whole would not be able to claim as much.
Claim limits for connected charities that don’t run charitable events in community buildings
When 2 or more CASCs are connected they must share a single £8,000 limit between them because they aren’t eligible to claim under the community building rules.
When 2 or more eligible charities are connected in a tax year and none of these charities run charitable activities in a community building they must share a single limit of £8,000 a year.
The limit is divided by the number of connected charities or CASCs that make a claim under the scheme in respect of small donations received in the tax year.
This rule allows a group of connected charities or CASCs to decide which of them will claim under GASDS on the group’s behalf for the small cash donations collected outside a community building.
Depending on the circumstances of each member in a particular group it may be possible to make a higher total claim if just one member claims on behalf of everyone than if each member makes its own claim.
If the connected charities or CASCs decide that only one of them is to make a claim, that charity or CASC is entitled to make a claim on up to the full £8,000 specified amount for small cash donations received by all of the connected charities or CASCs (provided the matching rule is satisfied).
The charity or CASC making the claim doesn’t need to have received £8,000 of small donations itself since the small cash donations are pooled to include the small cash donations received by connected charities or CASCs that aren’t making a GASDS claim in the tax year.
However for the purposes of matching Gift Aid donations with small cash donations, donations received under Gift Aid aren’t pooled between the eligible charities or CASCs.
The charity or CASC that makes the GASDS claim must still match the pooled small cash donations to the actual Gift Aid donations that it has itself received.
Claim limits for CASCs
CASCs must share a single £8,000 limit between them because they are not eligible to claim under the community building rules.
Chapter 8.10: Make an election to HMRC
To make an election, each of the connected charities must send a notice to HMRC by the earlier of:
- 2 years after the end of the tax year that the notice relates to
- 12 months after the date that the first GASDS claim was submitted in relation to that tax year made by any of the connected eligible charities
Elections must be made in writing signed by the authorised official of each charity, and sent by post to:
HM Revenue and Customs
Charities Savings and International 2
There is no specific form to use but the election should include:
- a list of all connected eligible charities in the group - including name, address and HMRC reference number
- the tax year that the election relates to
- the details of any GASDs claims already submitted for that tax year by any of the connected eligible charities
- the name and signature of the charity’s authorised official - if one election can’t be signed by all authorised officials, then say this in the election and advise the other signatures will follow separately
- any other relevant information that you think HMRC may need
Once HMRC has received an election from all of the connected charities in the group, the process can’t be reversed.
An election will only last for the tax year that it relates to. If the connected charities want to claim the single £8,000 allowance again in the following tax year, they’ll need to send a new election to HMRC.
Chapter 8.11: Mergers or changes of legal form
Charities and CASCs no longer need to take on another charity’s good record of claims if they want to merge or change their legal form.
However, a charity or CASC may decide to undertake a merger or a change in legal form for other reasons.
Before the Gift Aid Small Donation Scheme was amended in April 2017 new charities or CASCs could apply to HMRC to take on the compliance history of existing charities or CASCs if they were merging or changing legal form.
Due to the changes to the qualifying conditions for the Gift Aid Small Donation Scheme the merger process was withdrawn for new charities wishing to make claims on small donations collected on or after 6 April 2017.
*[ITA] Income Tax Act 2007