Guidance

Chapter 8: The Gift Aid Small Donations Scheme before 6 April 2017

Updated 27 March 2024

Chapter 8.1: Overview

On 6 April 2017 some of the rules for the Gift Aid Small Donation Scheme (GASDS) were changed.

This guidance relates to small donations that were collected before 6 April 2017.

Different rules apply to donations collected on or after 6 April 2017. Read Chapter 8: The Gift Aid Small Donations Scheme from 6 April 2017 for more information

Chapter 8.2: Introduction and overview

8.2.1 GASDS applies to small donations collected from 6 April 2013. It allows eligible charities and community amateur sports club (CASCs) to claim a top-up payment equivalent to Gift Aid on small cash donations they receive.

8.2.2 The purpose of GASDS is to allow charities and CASCs to claim a top-up payment on small cash donations (similar to Gift Aid) where it would be difficult to collect donors’ details on a Gift Aid declaration or where donors may be reluctant to give them.

This applies, for example, to street collections and collections during religious services. Small donations are £20 or less, given in cash (bank notes or coins).

8.2.3 GASDS does not require individual donors to complete a Gift Aid declaration, and the charity or CASC does not have to provide the donors’ details with their claim for a top-up payment.

8.2.4 GASDS is separate to the Gift Aid scheme, and is not a replacement for the aggregation of Gift Aid donations of £20 or less.

One of the conditions for making claims under GASDS is that charities must make regular Gift Aid repayment claims.

Charities and CASCs should continue to claim Gift Aid on donations of £20 or less received under Gift Aid.

8.2.5 GASDS does not apply to donations collected on or before 5 April 2013.

8.2.6 GASDS top-up payments are administered and calculated in the same way as Gift Aid. Payments to charities and CASCs under both the Gift Aid Scheme and GASDS are based on the basic rate of Income Tax (BRT) for a tax year.

Where the BRT is 20%, small donation income of £8,000 received in any tax year after 6 April 2016 will entitle the charity or CASC to top-up payments totalling £2,000 for the tax year, or £1,250 for earlier tax years, subject to meeting certain conditions.

See chapter 8.9 for more details of how the top-up payment is calculated.

8.2.7 GASDS is a public spending initiative, not a tax relief, so higher and additional rate individual taxpayers cannot claim tax relief on their GASDS donations.

Individual donors who want to claim tax relief on their donations should continue to make donations under Gift Aid. There’s no minimum or maximum limit on the amount of a donation that may be made under Gift Aid, subject to the donor having paid enough tax in a tax year to cover the amount of tax repaid to all charities and CASCs that they donate to in that same tax year.

8.2.8 In general, GASDS top-up payments are restricted to a maximum small donations limit of £8,000 per tax year after 6 April 2016 for eligible charities and CASCs. This limit may be varied depending on the circumstances of particular charities.

Examples used in this guidance assume that qualifying Gift Aid payments are received by charities and CASCs, and appropriate claims are made to HMRC and have been successful.

Chapter 8.3: Eligibility for the Gift Aid Small Donations Scheme

8.3.1 GASDS is a cash-based scheme and has fewer record-keeping requirements than Gift Aid. HMRC needs to be reassured that charities and CASCs will be able to operate GASDS correctly.

This means HMRC needs to see that a charity or CASC has a good Gift Aid record, as this shows they have been subject to checks and have been compliant.

Chapter 8.4: Eligibility conditions

8.4.1 To be eligible to claim top-up payments under GASDS in any tax year, a charity or CASC must:

• 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, and there must not have been a period of 2 or more consecutive complete tax years between those tax years during which it made no successful Gift Aid claims - in practice this means a Gift Aid claim must be made in at least every other tax year
• not have been given a penalty in respect of a Gift Aid claim or GASDS claim — if it has, the charity or CASC will not be eligible to claim under GASDS in the tax year in which the claim that the penalty related to was made, or in the following tax year (it will still be able to make Gift Aid claims)

8.4.2 The eligibility conditions are explained in chapters 8.5 to 8.7 of this guidance.

8.4.3 The minimum period for a new charity or CASC to qualify for this scheme is 2 complete tax years prior to the year of claim, as long as the charity or CASC makes a successful Gift Aid claim in each of those 2 years.

8.4.4 GASDS is based on tax years, not on calendar years or any other 12 month period, such as the accounting period of a charity. This is important when looking at the eligibility conditions, the donations received and claims that can be made under the scheme.

Tax years run from 6 April to 5 April the following year.

Chapter 8.5: Condition 1 — start-up period

8.5.1 A new charity or CASC must have existed for 2 complete tax years before making a claim to top-up payments under GASDS. In practice, this means:

• a charity established on 6 April 2014 will be eligible to claim a first top-up payment for tax year 2016 to 2017 as long as it meets condition 2 — the charity will not have existed for at least 2 complete tax years until 5 April 2016, so it cannot claim a top-up until after that date.

• a charity established on 7 July 2014 will not be eligible to claim a first top-up payment until tax year 2017 to 2018, and only if it also meets condition 2 — this is because the charity will not have existed for the complete tax year 2014 to 2015, so it cannot claim a top-up until after that date.

Chapter 8.6: Condition 2 — recent Gift Aid claims

8.6.1 The second condition for eligibility considers a charity’s or CASC Gift Aid claim activity over the previous 4 tax years. It requires successful claims to have been made in at least 2 of the tax years during this period.

This rule means charities and CASCs can make a Gift Aid claim in every other tax year to continue to be eligible.

8.6.2 There must be no more than one complete tax year between the tax years in which Gift Aid claims are made if the earlier claim is to be taken into consideration.

For example, a successful Gift Aid claim made in tax year 2010 to 2011 cannot be considered as 2 of the 4 successful claims if the next claim was not made until tax year 2013 to 2014.

This means that HMRC can see a charity’s or CASC’s claiming history over a reasonable period of time.

Example 1

Charity A is an established charity and has made successful Gift Aid claims in each of the tax years 2012 to 2013 and 2013 to 2014.

Charity A is eligible to make a claim under GASDS on small donations collected from 6 April 2014 (tax year 2014 to 2015).

Example 2

Charity B is a long established charity and has made successful Gift Aid claims in each of the tax years 2011 to 2012, 2012 to 2013 and 2015 to 2016.

There have been 2 consecutive tax years (2013 to 2014 and 2014 to 2015) in which charity B has not made a Gift Aid claim.

Claims made before the 2 year gap do not qualify, so charity B is not eligible to make a GASDS claim until it has made at least one more successful Gift Aid claim in tax years 2016 to 2017 onwards, as long as the gap between the tax years in which the claims are made is no more than one complete tax year.

8.6.3 For the purposes of the eligibility conditions only, Gift Aid claims made in a tax year do not need to be made in respect of donations received in that tax year. Claims for Gift Aid can be made up to 4 years after the end of the tax year or accounting period the claim relates to.

The ‘tax year’ is the year in which the Gift Aid claim is made, not the year in which the donations were received.

8.6.4 The year in which the Gift Aid donation is received is disregarded only in relation to condition 2.

Chapter 8.11 — Claiming limit explains that the separate matching rule requires the matched Gift Aid donations to be received in the same tax year as GASDS donations.

8.6.5 A successful Gift Aid claim is one made by the charity or CASC which has resulted in an amount failing to be exempt from Income Tax or Corporation Tax as a result of the claim.

8.6.6 A claim is not successful if it’s made incorrectly, for example because the charity or CASC did not obtain a valid Gift Aid declaration, or if the money was not used for charitable or qualifying purposes.

8.6.7 A claim that is reduced because of an error that is not liable to a penalty, but where a repayment is made on the net claim allowable, is still a successful claim.

Chapter 8.7: Condition 3 — penalties

8.7.1 There’s a further eligibility condition that, if a charity or CASC incurs a penalty in respect of an incorrect Gift Aid claim or GASDS claim, it will not be eligible for the scheme for the tax year in which the incorrect claim was made, or the following tax year.

However, correct Gift Aid claims made in those tax years will still count in determining eligibility in subsequent years.

8.7.2 This restriction does not apply if the penalty is suspended or overturned on appeal. HMRC can suspend penalties for careless inaccuracies in returns or documents. If a penalty is suspended, HMRC sets conditions in order to help an organisation avoid penalties for similar inaccuracies in the future.

HMRC specifies a period for the suspension and, if the organisation satisfies HMRC that is has complied with the conditions during that period, the penalty is cancelled.

8.7.3 This is to ensure that the charity or CASC has a good recent track record of making Gift Aid claims and has the necessary internal processes in place to operate GASDS properly.

Example 3

8.7.4 Charity C makes a Gift Aid claim in every tax year from 2011 to 2012 onwards. The Gift Aid claim made in tax year 2013 to 2014 is found to be incorrect and a penalty is given because the charity had deliberately made the incorrect claim. The charity cannot make a claim under GASDS until tax year 2015 to 2016 at the earliest.

8.7.5 If the charity had made a GASDS claim for 2013 to 2014 then that claim would be invalid. If the top-up payment had been made before the penalty on the incorrect Gift Aid claim had been finalised then the top-up payment would have become repayable to HMRC.

8.7.6 Charities and CASCs will need to work out for themselves whether they have satisfied the eligibility conditions and make claims accordingly. In general, if you have been making regular Gift Aid claims in the previous 2 tax years and have not had a penalty imposed in relation to the charity’s or CASC’s tax affairs, you could be eligible for a GASDS top-up payment from 6 April 2013.

Chapter 8.8: Gift Aid claims that count towards eligibility

8.8.1 If you’ve previously only made Gift Aid claims through a collection agent, you’ll need to provide HMRC with more information for them to be able to process your claim. HMRC will not be able to tell automatically that your charity or CASC has met the eligibility requirements.

If you need to rely on claims made by a third party acting on your charity’s behalf in order to meet the eligibility conditions, you’ll need to tell HMRC this on your claim form.

8.8.2 You’ll need to tell HMRC approximately when the claims were made, what the amount was and which agent submitted the claim.

If you’re filing your claim using the paper form, there’s a space in box 38 to provide this information. On the online form, there’s a space on the declaration page towards the end of the online process. Providing this information will help us to process your GASDS claim.

Chapter 8.9: How much charities can claim

8.9.1 Payments to charities and CASCs under the Gift Aid Scheme and GASDS are based on the BRT for a tax year. The top-up payment made under GASDS is calculated in the same way as Gift Aid.

This means that, where the BRT is 20%, small donation income of £8,000 after 6 April 2016, or £5,000 in earlier tax years will entitle the charity or CASC to a top-up payment of £2,000, or £1,250, for the 3 tax years 2013 to 2014, 2014 to 2015 and 2015 to 2016.

Chapter 8.10: Calculating the top-up payment

8.10.1 The amount of GASDS top-up payment available can change depending on what the BRT is.

To work out the amount you can claim:

1. Start with the total amount of small donations collected (for example, £200).
2. Take the per cent amount of the BRT away from 100 (for example, 100 minus 20 which gives 80).
3. Divide the per cent amount of the BRT by the result of step 2 (for example, 20 divided by 80 which gives 0.25).
4. 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.

8.10.2 You cannot claim both Gift Aid and GASDS top-up payments on the same donation. If a payment qualifies for Gift Aid and has a declaration attached to it, then it cannot be counted as a donation under GASDS. This includes where a charity or CASC knows they hold an enduring declaration for a donor.

Chapter 8.11: Claiming limit

8.11.1 There’s a limit on the amount of small cash donations that can be included in a claim. A claim can only be made on the amount of small donations received in a tax year and this is subject to a general limit of £8,000 of donations per tax year after 6 April 2016 (the specified amount).

The claim must also be matched by Gift Aid claims for the same tax year — see chapter 8.12].

8.11.2 The £8,000 limit applies for most charities and CASCs after 6 April 2016 but there are special rules for some charities and CASCs that are explained in chapters 8.20 to 8.23 on connected charities and CASCs and, in relation to charities only, in chapters 8.17 to 8.19 on community buildings.

8.11.3 From 6 April 2013 a charity or CASC with straightforward affairs is entitled to make a claim in respect of small donations it has received in the tax year.

If the small donations total more than £8,000, the amount on which the claim can be made is capped at £8,000 after 6 April 2016. The amount is capped at £5,000 for earlier tax years.

Chapter 8.12: Matching rule

8.12.1 The amount that can be claimed under GASDS is also affected by the matching rule. If a charity or CASC wants to make a GASDS top-up payment claim for a tax year, then it must also make a successful Gift Aid claim on donations received in the same tax year.

8.12.2 This is different from the eligibility requirement, where the Gift Aid claim does not need to relate to donations received in the same year in which the claim was made.

8.12.3 The maximum donations limit on which top-up payments under GASDS can be claimed is the lower of:

• 10 times the amount of donations on which the charity or CASC claims Gift Aid in the tax year, so for every £10 claimed under GASDS, the charity or CASC also needs to claim at least £1 of Gift Aid on other donations received in the same year (the matching rule)
• the overall cap (that is, the ‘specified amount’ in chapter 8.11.1), which will generally be £8,000, or £5,000 before 6 April 2016 (subject to the rules on connected charities and CASCs and community buildings)

Example 1

A charity has income of £5,500 in tax year 2016 to 2017, made up of donations that are eligible under Gift Aid of £200 and small cash donations of £5,300.

Income on which Gift Aid is claimed: £200.

Under the matching rule, GASDS can be claimed on up to 10 times the amount of Gift Aid income.

Gift Aid income of £200 × 10 = £2,000.

The charity can claim a GASDS top-up payment on a maximum of £2,000 of small cash donations.

The charity can claim on total donations of £2,200, made up of £200 under Gift Aid and £2,000 under GASDS.

Example 2

The charity in example 1 contacts some of their donors who agree to make Gift Aid declarations in respect of the donations already given in tax year 2016 to 2017. As a result the charity has donations of £8,800, made up of Gift Aid income of £800 and GASDS income of £8,000.

Income on which Gift Aid is claimed: £800.

Under the matching rule, GASDS top-up payments can be claimed on up to 10 times the amount of Gift Aid income.

Gift Aid income of £800 × 10 = £8,000.

The charity can claim a maximum GASDS top-up payment on income of £8,000.

The charity can claim on all of their donations of £8,800, made up of £800 under Gift Aid and £8,000 under GASDS.

Example 3

A charity has income of £13,000 in tax year 2016 to 2017, made up of donations on which Gift Aid can be claimed of £4,000 and small cash donations of £9,000.

Under the matching rule, GASDS top-up payments can be claimed on up to 10 times the amount of Gift Aid income.

Gift Aid income of £4,000 × 10 = £40,000.

The matching rule is satisfied. However the amount of small donations on which a claim can be made under GASDS is capped at £8,000 (the specified amount).

The charity or CASC can claim top-up payments on small donations received up to a maximum donations limit of £8,000.

The charity can therefore claim on donations of £12,000, made up of £4,000 under Gift Aid and £8,000 under GASDS.

Example 4

A charity has income of £2,500 in tax year 2016 to 2017, made up entirely of small cash donations.

Income on which Gift Aid is claimed: £0.

The charity has no Gift Aid receipts to match GASDS income received under the matching rule, so it cannot claim a top-up payment.

Example 5

Some of the donors to the charity in example 4 agree to make Gift Aid declarations for the year covering £200 of the donations. Now the charity has donations eligible for Gift Aid of £200 and small cash donations of £2,300.

Income on which Gift Aid is claimed: £200.

Under the matching rule, the charity can claim GASDS top-up payments on up to 10 times the amount of Gift Aid income.

Gift Aid income of £200 × 10 = £2,000.

The charity can now claim a GASDS top-up payment on small cash donations of £2,000.

The charity can claim on donations of £2,200, made up of £200 under Gift Aid and £2,000 under GASDS.

8.12.4 These examples show the benefit of claiming Gift Aid wherever possible. By encouraging donors to make Gift Aid donations (if they’re eligible) and by claiming for those donations under the Gift Aid Scheme, a charity or CASC can maximise its GASDS top-up payment claim under the matching rule.

Chapter 8.13: Using the matching rule

8.13.1 In applying the matching rule, the Gift Aid amount to be taken into account is the amount of Gift Aid donations made to the actual charity or CASC in the same tax year in which GASDS small cash donations were collected.

8.13.2 If a charity or CASC claims Gift Aid on donations received in past years, these donations cannot be used to match GASDS small cash donations made in a different year. Top-up payments under GASDS are 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.

8.13.3 Charities and CASCs should not need to keep any additional records to comply with the matching rules. You should already keep a robust record of donations received for audit purposes including the date of receipt of donations received under the Gift Aid Scheme and GASDS.

If proper records are kept, it should be a simple task to allocate Gift Aid receipts to a tax year for the purpose of matching a GASDS top-up payment claim in respect of small cash donations received in that tax year.

8.13.4 The example below shows how to work out the Gift Aid for matching purposes if the charity’s financial year is different from the tax year.

Example

A charity has an accounting year that runs from 1 January to 31 December and it receives the following income during 2 accounting years.

Calendar year	Donations eligible for Gift Aid	Small cash donations	Total
2016	£1,500	£6,000	£7,500
2017	£3,000	£7,000	£10,000

The charity can make Gift Aid claims on donations of £1,500 received in the period 1 January 2016 to 31 December 2016 and on donations of £3,000 received in the period 1 January 2017 to 31 December 2017.

The period 6 April 2016 to 5 April 2017 is tax year 2016 to 2017, which is used for GASDS top-up payment claim purposes.

The charity’s records show the following donations were received in the relevant tax year, 2016 to 2017.

Period	Gift Aid	Small cash donations	Total
6 April to 31 December 2016	£250	£4,000	£4,250
1 January to 5 April 2017	£150	£2,000	£2,150
Tax year total	£400	£6,000	£6,400

Under the matching rule, the charity can claim GASDS top-up payments on a maximum of £4,000 small cash donations for tax year 2016 to 2017. The payment is restricted by the level of donations received in tax year 2016 to 2017 on which Gift Aid is claimed (£400 Gift Aid donations × 10 = £4,000).

Chapter 8.14: Small donations

8.14.1 A small donation is a cash donation by an individual to a charity or CASC of £20 or less. The donation must be in bank notes or coins of any currency. It cannot be a donation in any other form, for example cheques, credit card donations, text donations or bank transfers.

Chapter 8.15: How to apply the definition

8.15.1 It will not 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 3 £10 notes but the person organising the collection may not see the £30 being put into the collection. Charities and CASCs need to take reasonable steps to apply the £20 limit but are not expected to scrutinise every donation as it’s made.

8.15.2 Reasonable steps to apply the £20 limit would include evidence that the charity has standing instructions to all collectors to note any donations greater than £20, and ensure that whoever records the donations excludes the ineligible ones.

8.15.3 Charities and CASCs should apply the following principles:

• bank notes of over £20 should not be treated as a small donation
• bank notes of £20 or below, and all coins, can be treated as a small cash donation unless the charity or CASC is aware they were made as part of one single donation of over £20, for example, if a donor personally hands over £30 to the person making the collection, or £30 is given in an envelope
• cash donations to a charity or CASC known to be from non-individuals (companies or trusts) are not within the scope of GASDS
• membership fees of a charity or CASC are not small donations for GASDS purposes
• donations where there’s a resulting benefit or gift for the donor are not small donations for GASDS purposes — however, a gift with a negligible value, such as a sticker to acknowledge the donation, is allowed
• a charity or CASC does not have to know the identity, or the tax status, of the donor of a small donation
• small donations must be collected and banked in the UK to qualify for GASDS — donations collected or banked outside the UK in a GASDS top-up payment claim are not eligible
• if the person handling the collection knows that their charity or CASC holds an enduring Gift Aid declaration from a donor, their small cash donations will not qualify for GASDS — they should be claimed under Gift Aid instead

Chapter 8.16: GASDS claims and administration

8.16.1 The rules for making and administering claims under GASDS are set out in the Small Charitable Donations Regulations 2013.

8.16.2 The rules for claims, amendments to claims, overpayments, enquiries and information powers are the same that apply to Gift Aid claims except for the following:

• all claims under GASDS must be made on a tax year basis, not based on the accounting period of the charity or CASC
• a charity or CASC must make a claim for top-up payments within 2 years of the end of the tax year in which the donation is received

8.16.3 Claims for top-up payments must be made using the Charities Online claiming process that is also used for claiming Gift Aid.

Chapter 8.17: Record keeping

8.17.1 What records you keep are a matter for you, but you must keep sufficient records to support your claims.

8.17.2 You’ll need to keep separate records of donations to which Gift Aid applies, and of donations that may be eligible for a top-up payment under GASDS.

8.17.3 In order to claim under GASDS, you must be able to demonstrate that you have:

• collected the small cash donations in the UK, recorded it in the books of the charity or CASC
• banked that money in a UK branch of a bank or other relevant institution, for example a building society, in an account held in the name of, or on behalf of, the charity or CASC

8.17.4 When the cash is counted, it’s good practice to keep a record of the amount received by denomination (for example, 5 pence, 20 pence, £1 coins) to cross reference with banking details at a later date.

You must keep a record of the denomination of notes received (particularly separating out £50 notes which are not eligible for the scheme). This record also needs to be kept to demonstrate that the cash donations included in a claim under GASDS are not above £20.

8.17.5 You must also be able to demonstrate a separate audit trail for Gift Aid donations received in the same period, so that you can demonstrate that your claim under GASDS is matched by a claim under Gift Aid (see chapter 8.12 for details of how donations are matched).

8.17.6 You’ll need to keep more detailed records of your small cash donations if you claim top-up payments collected while running charitable activities in a community building (see chapter 8.18).

You’ll need to keep separate records of the donations collected in each community building including:

• the address of the community building
• the date the money was collected
• a note of the number of beneficiaries attending the charitable activity

Chapter 8.18: Community buildings

8.18.1 The maximum amount of small donations on which claims for top-up payments can be made can be increased for charities running charitable activities in community buildings.

8.18.2 The community building rules do not apply to CASCs. Each CASC is entitled to claim on small cash donations up to a maximum of £8,000 each year after 6 April 2016, or £5,000 before 6 April 2016.

8.18.3 A charity may run activities that deliver its charitable purpose at a number of different centres. If one or more centres satisfies the community building rule, the charity may be entitled to make an increased claim under GASDS.

The claim for each qualifying centre is limited to the small cash donations collected at that centre during the charitable activities, subject to having matching Gift Aid donations.

8.18.4 A charity can receive an additional donations allowance of up to £8,000 for each community building after 6 April 2016, subject to meeting the conditions below.

8.18.5 The community building rules, combined with the connected charities rule outlined in chapters 8.20 to 8.23, aim to give a similar allowance under GASDS to similar charities that are structured differently.

Chapter 8.19: Definition of running charitable activities in a community building

8.19.1 ‘Running charitable activities in a community building’ means that a charity must carry out charitable activities in the community building for a group of at least 10 people who are beneficiaries of the charity.

The charitable activities must be run in the building on at least 6 occasions each year.

There must be at least 10 beneficiaries participating in each activity for the small donations collected during the activity to count toward the community buildings allowance.

8.19.2 It’s not necessary for the same 10 beneficiaries to attend each of the group activities throughout the year, as long as at least 10 beneficiaries are present each time a GASDS collection is made.

8.19.3 In many cases, employees and volunteers will also be beneficiaries of the charitable activities (for example, at a religious service), and they’ll count towards the group of 10 people.

However, in other cases, employees or volunteers (for example, a social worker facilitating a self-help group) may not be beneficiaries of the charitable activities. Although those persons attend the activities they do not count towards the 10 beneficiaries required to be present at each activity for the community buildings rule to apply.

8.19.4 The charitable activities must involve the participation of the group of at least 10 people at the same time. For example, a religious service, public lecture or support group may count as a charitable activity.

8.19.5 Activities where beneficiaries are not interacting as a group do not count as charitable activities. So 10 beneficiaries being counselled on a one-to-one basis in 10 separate rooms in the same building does not count as a qualifying charitable activity in a community building.

Similarly, those engaged in private prayer, confession, looking around a museum or other such activities would not count, as these are not group activities.

8.19.6 The people attending the charitable activity must not be charged for access to the community building or the part of the building in which the charitable activity is taking place.

Members of the public who are beneficiaries of the activity must be able to join the activity. Schools are unlikely to qualify as community buildings in their own right unless children who are not pupils of the school can join in freely with the activity.

8.19.7 For the purposes of calculating its maximum donations limit, a charity undertaking charitable activities in community buildings has a specified amount of the total of 2 parts:

1. The small cash donations collected from group members while the charity is running its charitable activities in the community building, up to a maximum of £8,000 after 6 April 2016 (the community building amount).

2. The small cash donations made to the charity in the tax year, other than those made to it in community buildings in the tax year by group members while it’s running charitable activities in the buildings, up to a maximum of £8,000 after 6 April 2016 (the remaining amount). This amount may be further restricted if the charity is connected to other charities.

8.19.8 A group member is a someone carrying out a group charitable activity in the community building.

8.19.9 Where a charity runs charitable activities in more than one community building, the community building amount is the sum of the amounts for each community building in which the charitable activities are run.

Example 1

An independent church opens its doors each week for an organised service of worship. The church runs charitable activities in a community building at least 6 times per year, subject to at least 10 beneficiaries attending each activity. There may be a collection of small cash donations taken from the congregation or gathering on these occasions.

Some churches may also have arrangements to collect small cash donations outside the church or, in the church when it is not running a charitable activity.

The church would be entitled to make a total claim in respect of up to £8,000 of small donations received from group members while running charitable activities in the church (the community building amount). They could also claim on up to a further £8,000 of other small cash donations received in the church when the charitable activity is not taking place. The total amount they can claim will be subject to matching Gift Aid donations.

Example 2

A medical charity established to support people who suffer from a specific condition undertakes monthly meetings in each of 2 different community buildings and receives small donations from beneficiaries attending those meetings. The charity also runs a street collection to help raise funds to support its work.

The charity would be entitled to make a claim in respect of up to £8,000 of small cash donations received after 6 April 2016 in each of the 2 community buildings during the charitable activities (the sum of the community building amounts), plus up to a further £8,000 in respect of the street collection and other small cash donations they receive (the remaining amount).

In total, the charity would be entitled to make a total claim in respect of up to £24,000 of small cash donations received after 6 April 2016, subject to matching Gift Aid donations.

If £6,000 of small cash donations are collected from group members during charitable activities held in one of the community buildings and £3,000 of small cash donations are collected in the other building in the same tax year, then the specified amount for the charity for that tax year would be £17,000.

£6,000 (donations from community building 1) + £3,000 (donations from community building 2) + £8,000 (other small donations from street collections) = £17,000 (specified amount for the tax year for the charity).

8.19.12 A charity will receive an increased specified amount in respect of a community building only where the activity undertaken is a charitable activity of the charity and is not a fundraising activity.

Example 3

A bereavement counselling group meets every quarter in a community building to deliver counselling to its beneficiaries. In addition, the group hosts an annual summer fete and Christmas party for the wider local community in the same building to raise funds for the group.

This group will not be entitled to an increased specified amount under the community building rule because it only runs activities in a community building to deliver its charitable objectives for its beneficiaries 4 times in the tax year. The other 2 events are specific fundraising occasions.

Chapter 8.20: Definition of a community building

8.20.1 A community building is a building, or those parts of it, to which the public have access at some or all times.

8.20.2 Examples of community buildings include:

• village halls
• town halls
• mosques
• synagogues
• churches
• cathedrals

8.20.3 A building may be a community building for one charity but not for another. For example, a school may be a charity in its own right. However, the school is unlikely to be a community building for the school charity unless, for example, any child that would be a beneficiary of the charity can attend the charitable activity even if the child is not a registered pupil.

However, a school may hire out its premises to other charities and, if the activities of those charities meet the qualifying conditions, then the school may be a community building for them.

8.20.4 A building, or part of a building, is specifically excluded from being a community building for GASDS purposes if the building (or parts of it) are used wholly or mainly for residential purposes or the sale or supply of goods.

8.20.5 Examples of buildings which are not community buildings include:

• charity shops
• residential care homes

8.20.6 Parts of buildings used wholly or mainly for other commercial purposes are excluded from the meaning of a community building, except:

• at times when a charity is using that part of a building to carry out a charitable activity
• when the charity has exclusive use of that part of the building at that time

8.20.7 For example, 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, as long as 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 will not qualify as a community building.

8.20.8 2 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.

Example

A school may have 6 buildings on the school site but can only claim to have 1 community building under GASDS, not 6.

8.19.9 The Treasury has powers to make an order providing that in specified circumstances a building is (or is not) to be treated as a community building, and to specify circumstances when 2 or more buildings in the same vicinity are to be treated as a single building.

Chapter 8.21: Connected charities and CASC

8.21.1 The maximum donations limit on which a charity or CASC can normally claim a top-up payment in a tax year is 10 times the amount of Gift Aid donations received in that tax year or, if less, the specified amount, which is generally £8,000 after 6 April 2016, or £5,000 before 6 April 2016.

8.21.2 The specified amount may be reduced where a charity or CASC is connected with one or more other charities or CASCs. Where charities and CASCs are connected, they’ll share a single £8,000 limit between them.

8.21.3 If any of the connected charities runs charitable activities in a community building, their claim on the small donations collected in a community building is not affected.

8.21.4 The connected charity restriction ensures that there’s no incentive for charities to fragment into a number of different charities in order to increase their allowance under GASDS.

8.21.5 It also ensures that charities or CASCs which operate in a similar way, but are structured differently, receive a roughly similar entitlement under the scheme.

Chapter 8.22: Definition of ‘connected’ for the purposes of GASDS

8.22.1 Charities or CASCs are connected to each other at any time during a tax year where:

• the same person (or connected persons) has control over those charities or CASCs
• the charities or CASCs have the same (or very similar) purposes

8.22.2 The connected charity rule is based on the connected persons rule used more widely for tax purposes, and found at section 993 of the Income Tax Act 2007 (ITA). The rule applies to both charitable trusts and charitable companies.

8.22.3 In general terms, charities are connected when one or more of the following applies:

• one charity or CASC controls another
• one charity or CASC has common control over 2 or more charities or CASCs
• a number of charities or CASCS are control linked — for example, where charity A has control of charity B and charity B has control over charity C, then all 3 charities are connected

8.22.4 However, where the purposes and activities of 2 connected charities or CASCs are not the same, or substantially similar, they will not be connected for GASDS purposes.

Example 1

A primary school and a nursery school have substantially the same purpose (the advancement of education) and so, depending on the precise circumstances, they may be connected charities.

Example 2

A school, a zoo and a museum can all have similar objectives (the advancement of education) but their activities are sufficiently different for the charities not to be regarded as connected to one another.

8.22.5 A charity or CASC that is not eligible to claim under GASDS in a particular tax year is not connected with another charity or CASC in that tax year for GASDS purposes.

Example 3

Charity A has been established for 10 years. In tax year 2016 to 2017, it receives £8,000 under the Gift Aid Scheme and £20,000 small cash donations.

Charity A is connected to charity B which has been established for less than 2 complete tax years, and charity C which has been established for 5 tax years but received no income under the Gift Aid Scheme in tax year 2016 to 2017.

Neither charity B nor charity C is eligible to apply for a GASDS top-up payment in tax year 2016 to 2017, so the specified amount for charity A is not shared between the 3 charities in that tax year.

Charity A can claim on the maximum £8,000 GASDS allowance, and claim a top-up payment of £2,000 for tax year 2016 to 2017.

The amount of small cash donations on which a top-up payment can be claimed is limited to the specified amount of £8,000 rather than the £20,000 received. Under the matching rule, a GASDS top-up payment can be claimed on up to 10 times the amount of Gift Aid income.

For charity A, the matching rule is satisfied because the income on which Gift Aid is claimed is £8,000.

£8,000 x 10 = £80,000 which is more than the specified amount. The charity can claim on the full specified amount of £8,000 under GASDS, and on £8,000 under Gift Aid.

Chapter 8.23: Definition of ‘control’ over a charity or CASC

8.23.1 In applying section 993 ITA to charitable trusts, a person has control over a charity that is a 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 the person acting alone or by the person acting together with any other persons who are trustees of the charity and who are connected with the person
• has power to appoint or remove a trustee of the charity, either 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 the charity, either alone or together with other persons

8.23.2 The connected persons rules in section 993 ITA apply certain tests to determine if companies are connected by reference to the persons controlling the companies through share holdings, voting rights or other powers given to them.

These tests apply to charitable companies, but do not work for charitable trusts - a different rule applies to connect one charitable trust to another charitable trust.

8.23.3 A charitable trust is connected with another charitable trust at a particular time if at least half of the trustees of one of the charitable trusts:

• are trustees of the other charitable trust
• are persons who are connected with persons who are trustees of the other charitable trust
• are a combination of both
• have the same (or very similar) purposes

Example 1

Anne and John are the only trustees of charitable trust A. Anne is also one of 4 trustees of charitable trust B. Both trusts undertake the same activities. Charitable trust A is connected to charitable trust B because Anne, who constitutes half the trustees of charitable trust A, is also a trustee of charitable trust B.

If charitable trust A had a third trustee, who’s not also a trustee of charitable trust B, and is not connected with a trustee of charitable trust B, then the trusts would not be connected for the purposes of GASDS.

Example 2

Charitable company A has 5 directors. However, 3 of these directors are appointed by the directors of charitable company B. The directors of charitable company B can block any decisions made by the directors of charitable company A. Charitable company A is controlled by charitable company B, and therefore connected to them.

Chapter 8.24: Claiming limits for connected charities and CASCs that do not run charitable activities in a community building

8.24.1 Where charities or CASCs are connected in a tax year, and none of the charities runs charitable activities in a community building, then the small cash donations received by each of the connected charities or CASCs are pooled.

8.24.2 The specified amount of £8,000 from 6 April 2016 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 (connected charities running charitable activities in a community building may be able to claim more and the rules for such charities are explained in chapter 8.19).

8.24.3 This rule allows a group of connected charities or CASCs to decide (if they wish) 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.

8.24.4 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 (as long as the matching rule is satisfied).

8.24.5 The charity or CASC making the claim does not 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 are not making a GASDS claim in the tax year.

8.24.6 However for the purposes of matching Gift Aid donations with small cash donations, donations received under Gift Aid are not 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.

Example

In tax year 2016 to 2017, charity A receives £3,000 under the Gift Aid Scheme and £6,000 in small donations. Charity B receives £800 under the Gift Aid Scheme and £3,000 in small cash donations.

Charity A and charity B are connected with each other and are both eligible to claim a GASDS top-up payment in 2016 to 2017. They decide that only one GASDS top-up payment claim will be made between them in 2016 to 2017, by charity B.

Charity B can claim GASDS in 2016 to 2017 in respect of the pool of small donations of £9,000 received by charity A (£6,000) and Charity B of (£3,000).

The amount of small cash donations on which a top-up payment can be claimed is, however, capped at the specified amount of £8,000 rather than the £9,000 received.

Under the matching rule, a GASDS top-up payment can be claimed on up to 10 times the amount of Gift Aid income. The matching rule is satisfied because the income on which Gift Aid is claimed is £800. £800 x10 = £8,000 which is the same as the specified amount.

So the charity can claim on the full specified amount of £8,000 under GASDS and on £800 under Gift Aid.

8.24.7 If 2 connected charities or CASCs decide to make a claim under GASDS in the same tax year, the specified amount of £8,000 is divided equally between them, and each of the charities or CASCs is entitled to make a claim in respect of up to £4,000 small donations from the pool of small donations received by the connected charities or CASCs.

Example

In tax year 2016 to 2017, charity A receives £3,000 under the Gift Aid Scheme and £4,000 in small cash donations. Charity B receives £6,000 under the Gift Aid Scheme and £3,000 in small cash donations.

Charity A and charity B are connected with each other and are both eligible to claim GASDS top-up payments in 2016 to 2017. They decide that both will make a GASDS top-up payment claim in 2016 to 2017.

The pooled amount of small donations is £9,000, but the amount of small cash donations on which a top-up payment can be claimed by each charity is limited to the specified amount of £4,000 each (£8,000 divided by the number of charities claiming).

The matching rule is satisfied for charity A because the charity received Gift Aid donations of £3,000 and GASDS donations of £6,000. The matching rule is satisfied because £3,000 × 10 = £30,000 which is more than the specified amount of £4,000.

The matching rule is also satisfied for charity B because the charity has Gift Aid donations of £4,000 and GASDS donations of £3,000. £4,000 × 10 = £40,000 which is more than the specified amount of £4,000.

Although charity B has only received £3,000 in small cash donations it can claim on the pooled donations up to the specified amount of £4,000. So its top-up payment will be £750.

Charity A has received £6,000 in small cash donations but can only claim up to the specified amount of £4,000. So its top-up payment will also be £1,000.

8.24.8 How a group of connected charities make claims under GASDS in order to maximise use of the £8,000 allowance between them is up to them to decide.

Remember that under the matching rule, the small donations in respect of which a top-up payment claim is made by a charity or CASC must be matched with Gift Aid donations received by that charity or CASC in the same tax year.

8.24.9 The Gift Aid donations cannot be pooled between the connected eligible charities and CASCs for the purpose of meeting the matching rule.

Example

In tax year 2016 to 2017, charity A receives £200 donations under the Gift Aid Scheme and £6,000 in small cash donations. Charity B receives £4,000 donations under the Gift Aid Scheme and £2,000 in small cash donations.

Charity A and charity B are connected with each other and are both eligible to claim GASDS top-up payments in tax year 2016 to 2017. They decide that both will make a GASDS top-up payment claim in tax year 2016 to 2017.

The pooled amount of small donations is £8,000, but the amount of small cash donations on which a top-up payment can be claimed by each charity is limited to the specified amount of £4,000 each (£8,000 divided by the number of charities claiming).

However, because charity A has received £200 of Gift Aid donations it can only claim on £200 × 10 = £2,000 of small donations.

For charity B, the matching rule is satisfied because the charity has received £4,000 of Gift Aid donations. £4,000 × 10 = £40,000 which is more than the specified amount so the maximum donation limit remains at £4,000.

The small donations are pooled and so, although charity B only received £2,000 in small cash donations, it can claim on £4,000 of pooled small donations. So its top-up payment will be £1,000.

Charity A has received £4,000 in small cash donations but can only claim on £2,000 under the matching rule. So its top-up payment will be £500.

Chapter 8.25: Claiming limits for connected charities and CASCs where one or more of the charities run charitable activities in a community building

8.25.1 An eligible charity running charitable activities in a community building may have 2 sources of small donations:

1. Small cash donations collected from group members while running charitable activities in a community building (the community building amount).

2. Small cash donations made to the charity other than those made to it in community buildings by group members while it’s running charitable activities in the buildings (the remaining amount).

8.25.2 The charity may be connected with other eligible charities or CASCs (the other charities may or may not have community buildings). If this is the case then the remaining amounts of all the connected charities or CASCs are pooled.

The main £8,000 limit after 6 April 2016 is then divided between the connected charities or CASCs that claim top-up payments on those remaining amounts in that year. This is the same as for connected charities and CASC that do not claim under the community buildings rules.

8.25.3 The donations collected from group members while running charitable activities in a community building are not pooled with any other small cash donations of connected charities.

These are to be used solely for a GASDS top-up payment claim by that charity only, subject to the maximum capped community building amount of £8,000.

8.25.4 The charity must make its own claim to a top-up payment on its community building amount. However the charity is not required to claim on the pooled remaining amounts of small donations. The connected charities can decide between them which of them will claim for those pooled remaining amounts on behalf of the group.

8.25.5 The community buildings and connected persons rules work together to ensure broadly similar treatment for organisations that carry out broadly similar functions but just happen to be structured differently.

Example

Three eligible charities, A, B and C, are connected in tax year 2016 to 2017. Charities B and C both run charitable activities in a community building.

The charities receive donations as shown in the table below and decide between themselves that they’ll all make a GASDS top-up payment claim in respect of the remaining amounts of small donations received.

	Small cash donations in community buildings (community building amount)	Other small cash donations (remaining amount)	Gift Aid
Charity A	£0	£2,000	£2,500
Charity B	£2,000	£2,500	300
Charity C	£3,000	£4,000	£5,000
Total	£5,000	£8,500	£7,800

If all 3 charities make a claim in respect of the remaining amounts of small donations received (of which there’s a pool of £8,500 available) their claims will be capped at a maximum level of £8,000 which must then be shared between them. In this case, the 3 charities will be able to claim on remaining amounts of pooled small donations up to £2,667 each.

If all 3 charities make a top-up claim in respect of their remaining amounts then the specified amount for each charity is:

• charity A: £2,667
• charity B: £4,667 (£2,000 for their community buildings donations + £2,667 for their other remaining amount donations)
• charity C: £5,667 (£3,000 for their community buildings donations + £2,667 for their other remaining amount donations)

Charity A

Charity A has satisfied the matching rule because it has Gift Aid income of £2,500. £2,500 × 10 = £25,000 which is more than the specified amount of £2,667.

Charity A can claim the following top-up payment.

Top-up payment = £1,667 × 20 ÷ 80 = £666.75

Charity B

The specified amount for charity B is £4,667. However, charity B received Gift Aid income of £300 so it can only claim under GASDS on £300 × 10 = £3,000 under the matching rule.

Charity B can claim the following top-up payment.

Top-up payment = £3,000 × (20 ÷ 80) = £750.00

Charity C

The specified amount for charity C is £5,667. Charity C has satisfied the matching rule because it has received Gift Aid income of £5,000. £5,000 × 10= £50,000 which is more than the specified amount. The maximum donations limit will remain the same as the specified amount.

Charity C can claim the following top-up payment.

Top-up payment = £5,667 × (20 ÷ 80) = £1,416.75

Charity B did not have enough Gift Aid donations to cover its share of the pooled remaining small donations. So by sharing the main £8,000 allowance between all the eligible charities, top-up payments are received on a total of only £7,334 of small donations. This is despite the pooled donations being more than £8,000.

The group could have maximised its top-up payments if charity B had claimed only on its small donations collected in its community buildings, leaving charity A or charity C (or both) to claim the main £8,000 allowance on the pooled remaining small donations.

8.25.6 A charity running charitable activities in a community building which is connected to other charities can claim a top-up payment on small donations collected in the community building without claiming on its other small donations (its ‘remaining amount’ - see chapter 8.24.4). That remaining amount is pooled with the remaining amounts of other connected charities.

8.25.7 If it’s more beneficial for just one of the charities to make a claim on behalf of all the connected charities, then the charity with the community buildings should make their claim by inserting the amount of donations collected in the community buildings and leaving all other boxes blank.

Example

Three eligible charities, A, B and C, are connected in a tax year. Charities B and C both run charitable activities in a community building.

The charities receive donations as shown in the table below and decide between themselves that charity A only will make a GASDS top-up claim in respect of the remaining amounts of small cash donations received.

	Small cash donations in community buildings (community building amount)	Other small cash donations (remaining amount)	Gift Aid
Charity A	£0	£2,000	£2,500
Charity B	£2,000	£2,600	£1,500
Charity C	£3,000	£4,000	£5,000
Total	£5,000	£8,600	£9,000

If only charity A makes a claim in respect of the remaining amounts of small cash donations received (of which there’s a pool of £8,600 available) then this is capped at a maximum level of £8,000. So the specified amount for charity A is £8,000.

If only charity A makes a top-up claim in respect of the pooled remaining amounts of small cash donations and charity B and charity C therefore claim only in respect of their community buildings amounts, then the specified amounts applying to each charity are:

• charity A — £8,000
• charity B — £2,000
• charity C — £3,000

Charity A

Charity A has satisfied the matching rule because it has received Gift Aid income of £2,500. £2,500 × 10= £25,000 which is more than the £8,000 specified amount. The maximum donations limit will remain the same as the specified amount.

Charity A can claim the following top-up payment.

Top-up payment = £8,000 × (20 ÷ 80) = £2,000

Charity B

For charity B the specified amount is £2,000. It has met the matching rule because it has received Gift Aid income of £1,500. £1,500 × 10 = £15,000 which is more than the specified amount. The maximum donations limit therefore remains the same as the specified amount.

Charity B can claim the following top-up payment.

Top-up payment = £2,000 × (20 ÷ 80) = £500

Charity C

For charity C the specified amount is £3,000, It has met the matching rule because it has received Gift Aid income of £5,000. £5,000 × 10 = £50,000 which is more than the specified amount. The maximum donations limit therefore remains the same as the specified amount.

Charity C can claim the following top-up payment.

Top-up payment = £3,000 × (20 ÷ 80) = £750.

Chapter 8.25: Mergers or changes of legal form

8.25.1 There may be commercial, regulatory or other reasons why a charity or CASC may want or need to undertake a merger or otherwise change its legal form at some time in the future.

8.25.2 A charity or CASC that takes on the activities of one or more predecessor charities or CASCs can apply to HMRC under section 12 or section 13 of the Small Charitable Donations Act 2012 (SCDA) to take on the compliance history of one of its predecessors for the purpose of deciding the new charity’s eligibility to make GASDS claims.

This means that a newly formed charity or CASC may be able to become eligible under GASDS faster than if they had to wait for the normal 2 year start up period.

However, time limits for making the application apply.

The charity or CASC must apply to HMRC within 90 days of the date when the new charity or CASC began to carry on the activities of the relevant old charity or CASC. If earlier, an application must be made 60 days before the new charity or CASC makes its first gift aid claim. See chapter 8.28 on the procedure for making an application

8.25.3 The rules surrounding mergers of charities or CASCs are not mandatory and the new charity or CASC can choose not to take advantage of this option if it prefers not to.

Chapter 8.26: New charity or CASC taking over the activities of one charity or CASC

8.26.1 A charity or CASC can be created to take over the activities of a single predecessor charity or CASC, for example on a change of legal form from an unincorporated charity to a charitable incorporated organisation.

The new charity or CASC can benefit from its predecessor’s Gift Aid compliance history. HMRC will certify agreement to this if it’s satisfied (on receiving a written application from the new charity) that all 4 of the following conditions are met:

• the new charity or CASC was created with a view to taking over all of the activities of the old charity or CASC
• the new charity or CASC has taken over those activities
• the purposes of the new charity or CASC are substantially similar to the purposes of the old charity or CASC (taken together)
• more than half of the managers of the new charity or CASC were managers of the old charity or CASC

8.26.2 See chapter 8.26.6 for the definition of a manager, and chapter 8.28 for how to make an application.

8.26.3 For example, a charitable trust successfully operating the Gift Aid Scheme for 4 consecutive tax years may decide to wind up and transfer its assets to a new charitable company with the same or similar objects in year 5.

HMRC may determine that the new charitable company can rely on the good compliance history of the old charitable trust so that the new charitable company does not have to wait for 2 complete tax years to satisfy the eligibility criteria for GASDS.

8.26.4 It is not essential that the old charity or CASC is dissolved when the new charity or CASC applies to HMRC to benefit from the old charity’s Gift Aid and GASDS compliance record.

The new charity or CASC must have taken over the activities of the old charity or CASC and, as far as possible, the old charity’s or CASC’s property. The new charity or CASC must also have purposes substantially similar to those of the old charity or CASC.

8.26.5 More than half of the managers of the new charity or CASC must have been managers of the old charity or CASC. This condition helps to ensure that the new charity or CASC continues to be led and controlled by the same people who established a good compliance track record for the old charity or CASC.

8.26.6 A ‘manager’ is a person having the general control and management of the administration of the charity or CASC. All trustees and directors of a charity and all directors of a CASC are ‘managers’.

8.26.7 Where the merger or change in legal form takes place after the start of a tax year then there are 2 possible situations.

1. If the old charity or CASC has made a successful top-up claim in respect of small donations received in that tax year, the new charity or CASC cannot make a top-up claim until the following tax year at the earliest.

2. Donations collected by the new charity after the merger, but in the same tax year as the merger, will not be eligible for a top-up payment.

If the old charity or CASC has not made a successful top-up claim in respect of small donations received in that tax year, the new charity or CASC may make a top-up claim in the tax year of merger on small cash donations received by the new charity after the date of merger.

This is as long as:

• the old charity or CASC would have been eligible to make a top-up claim for that year if the merger had not taken place
• HMRC has certified that the 4 conditions set out in chapter 8.26.1 have been met, with the result that the new charity or CASC can then benefit from its predecessor’s Gift Aid compliance history

Example

Charity A, a charitable trust, changes its legal form to become charity B, a charitable incorporated organisation on 1 October 2015.

Charity A has successfully claimed top-up payments in tax year 2014 to 2015 but has not made any top-up claims in respect of small cash donations made since 6 April 2015. Charity B may claim top-up payments for tax year 2015 to 2016 on small cash donations collected by charity B between 1 October 2015 and 5 April 2016.

If charity A had made a successful top-up claim on 31 July 2015 for small donations collected since 6 April 2015, then charity B will only be able to make a claim on small cash donations collected on or after 6 April 2016. Charity B will not be able to claim for small cash donations collected by it from 1 October 2015 to 5 April 2016.

If, instead, charity A had made a successful top-up claim on 31 July 2015 for small donations collected between 1 October 2014 and 5 April 2015 (the previous tax year) and not claimed on any small cash donations collected after 5 April 2015, then charity B may claim top-up payments for small cash donations collected by charity B since 1 October 2015.

That is because charity A had not made a claim in respect of small donations collected since 6 April 2015.

Chapter 8.27: New charity or CASC taking over activities of several charities

8.27.1 A new charity or CASC created to take on the activities of 2 or more charities or CASCs can take on the compliance history of one of the predecessor charities or CASCs for the purposes of deciding the new charity’s or CASC’s eligibility to make GASDS claims.

HMRC will agree to this if they are satisfied the following 4 conditions are met:

• the new charity or CASC was created with a view to taking over all of the activities of the old charities or CASCs
• the new charity or CASC has taken over those activities
• the purposes of the new charity or CASC are substantially similar to the purposes of the old charities or CASCs (taken together)
• more than half of the managers of the new charity or CASC were managers of the old charities or CASCs

8.27.2 Charities and CASCs must make a written application for HMRC to certify that in its opinion the 4 conditions set out in chapter 8.27.1 have been met so that a Gift Aid compliance history can be transferred to the new charity following a merger. See chapter 8.28 for more details of how to make an application.

8.27.3 The new charity or CASC must have taken over the activities of the pre-merger charities or CASCs and have purposes that are substantially similar to the pre-merger charities or CASCs.

8.27.4 More than half of the managers of the new charity or CASC must have been managers of the old charities or CASCs. See chapter 8.26.6 for the definition of a manager.

8.27.5 It’s not necessary for the new managers to be drawn from all of the old charities.

Example

Charity A, with 4 managers, merges with charity B, with 2 managers, to form charity C.

Charity C has 3 managers. 2 of the managers of charity C were managers of charity A.

The third manager of charity C is new and was not associated with either charity A or charity B. Charity C meets the requirement that over half of its managers were old charity managers.

8.27.6 Where HMRC certifies the 4 conditions in chapter 8.27.1 are satisfied, the new organisation would not necessarily need to wait for 2 complete tax years before satisfying the eligibility criteria.

Instead it can rely on the compliance history of one of the pre-merger charities or CASCs, known as the ‘relevant old charity’.

8.27.7 Where a new charity or CASC is created, the relevant old charity is the pre-merger charity or CASC with the least eligibility history.

All the pre-merger charities or CASCs would be eligible to claim under GASDS in the year of merger

8.27.8 If all the pre-merger charities or CASCs would be eligible to claim GASDS in the year of merger, then you can identify the relevant old charity by:

• assuming that (if the merger had not gone ahead) none of the pre-merger charities or CASCs makes a successful Gift Aid claim in the year of merger or in future
• identifying which of the charities or CASCs would cease to be eligible to claim top-up payments under GASDS first

Example

Charities A, B and C merge to form charity D on 7 April 2016. All of the conditions set out in chapter 8.27.1 are met. The Gift Aid claim history of charities A, B and C is as follows.

Charity	2013 to 2014	2014 to 2015	2015 to 2016	2016 to 2017
Charity A	Successful claim	Successful claim	Successful claim	Assume no claim
Charity B	Successful claim	Successful claim	No claim	Assume no claim
Charity C	No claim	Successful claim	Successful claim	Assume no claim

The relevant old charity is charity B because it would not be eligible to make a top-up claim in 2017 to 2018. Charities A and C could make claims in 2017 to 2018, but not in 2018 to 2019.

All but one of the pre-merger charities or CASCs would be eligible to claim under GASDS in the year of merger.

8.27.9 If all but one of the pre-merger charities or CASCs would be eligible charities or CASCs in the year of merger then the relevant old charity is the charity or CASCs that is not eligible.

More than one of the pre-merger charities or CASCs would not be eligible to claim under GASDS in the year of merger.

8.27.10 If more than one of the pre-merger charities or CASCs would not be eligible charities or CASCs in the year of merger then, to identify the relevant old charity:

• assume that, if the merger had not gone ahead, each of the ineligible pre-merger charities or CASC makes a successful Gift Aid claim in the year of merger and in future
• identify which of those charities or CASCs would be the last to become eligible to make a GASDS top-up claim

Example

Charities A, B and C merge to form charity D on 7 April 2017. All of the conditions set out in chapter 8.27.1 are met. The following table shows the Gift Aid claim history of charities A, B and C.

Charity	2013 to 2014	2014 to 2015	2015 to 2016	2016 to 2017	2017 to 2018
Charity A	Successful claim	Successful claim	Successful claim	No claim	Eligible in year of merger
Charity B	Successful claim	Successful claim	No claim	No claim	Assume claim made
Charity C		Created	No claim	Successful claim	Assume claim made

Charity A cannot be the relevant old charity as it’s eligible to make a GASDS top-up claim for the year of the merger. Charity C would be able to make a top-up claim from tax year 2018 to 2019. The relevant old charity is therefore charity B because it would not be eligible to make a GASDS top-up claim until tax year 2019 to 2020. Charity D therefore takes on the claim history of charity B.

8.27.11 If there’s a tie between 2 or more pre-merger charities or CASCs when determining which of them is the relevant old charity, then the new charity must elect which of the charities or CASCs is to be the relevant old charity.

8.27.12 Where the merger takes place after the start of a tax year (that is, after 6 April):

• the new charity or CASC cannot take on the compliance history of the relevant old charity or CASC to determine its eligibility until the following tax year at the earliest if any of the old charities or CASCs have made a successful top-up claim in respect of small donations made to it in that tax year
• the new charity or CASC can take on the compliance history of the relevant old charity or CASC to determine its eligibility to make claims for the year of the merger if none of the old charities or CASCs have made a successful top-up claim in respect of small donations given to it in that tax year

Chapter 8.28: Making an application for certification

8.28.1 Charities and CASCs must make a written application to HMRC for a certification that in their opinion, the 4 conditions set out at chapter 8.27.1 have been met so that a Gift Aid compliance history can be transferred to a new charity following a merger, setting out evidence of how these conditions are met.

8.28.2 Applications should be sent to:

HM Revenue and Customs
Charities Savings and International 2
BX9 1BU
United Kingdom

8.28.3 There’s no specific form to use to apply for certification under section 12 or section 13 of the SCDA.

The charity or CASC should write to HMRC and provide the following information for each old charity or CASC and the new charity or CASC:

• the name and address of the charity or CASC and any reference number given by HMRC
• the charitable instruments or other governing documents of the charity or CASC
• the names and addresses of the managers of the new charity or CASC and of the managers of the old charity or CASC
• a full description of the charitable or sporting activities
• full details of the assets transferred from each old charity or CASC to the new charity or CASC
• any other information which may reasonably be required by HMRC in order to reach its decision on the application
• the consent to the application of each old charity or CASC that is in existence at the time of the application, signed by 2 old charity or CASC managers of each consenting charity. If the application is made under section 13(1) SCDA, notification of which of the old charities or CASCs is the relevant old charity or CASC for the purposes of the application

8.28.4 Applications must be made within 90 days of the date when the new charity or CASC began to carry on the activities of the relevant old charity or CASC. Or, if earlier, 60 days before the new charity or CASC makes its first gift aid claim. This will ensure that the relevant consents by the trustees of the old charity or CASC can be given in time.