Gift Aid and intermediaries
Published 5 December 2016
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Who is likely to be affected
These changes will be of interest to the charity sector, intermediaries who collect donations on behalf of charities and individuals who donate to charities.
General description of the measure
Currently a donor has to complete a Gift Aid declaration (GAD) each time they give to a new charity when giving through an intermediary. This is one of the contributing factors that has restricted the take up of Gift Aid when donating through digital channels, especially in SMS text donations.
The new process allows a donor to give permission to an intermediary to create GADs on their behalf for all subsequent donations made in that tax year.
Policy objective
The government wants to maximise the take up of Gift Aid on eligible donations.
This measure will make it easier for donors to certify that Gift Aid can be claimed on donations to multiple charities made through intermediaries via digital channels, leading to Gift Aid being claimed on a greater proportion of eligible donations and more tax relief going to charities.
Background to the measure
This measure was originally announced in Budget 2013. A consultation entitled Gift Aid and digital giving ran from July 2013 to September 2013. At Budget 2014 the government announced that it would legislate to facilitate digital giving through intermediaries. Legislation in Finance Acts 2015 and 2016 allows a greater role for intermediaries. Detailed regulations providing for that greater role will be made and laid shortly.
Detailed proposal
Operative date
The regulations will be made and laid shortly and will come into force on 6 April 2017.
Current law
The primary legislation governing Gift Aid is in Chapter 2, Part 8 of Income Tax Act 2007 (ITA 2007).
Section 428 of ITA 2007 specifies the meaning of a GAD for Gift Aid and provides for regulations to be made specifying what the declaration must contain, the manner in which it should be given and the way it should be recorded.
Regulations made in 2000 (SI 2000/2076) made that a GAD can only be given by an individual who is the donor. The individual must give the GAD to the charity.
Proposed revisions
The government has consulted on new regulations to be made and laid later this year which sets out how the new permission process works. These regulations will replace the 2000 regulations. They broadly replicate the current regime for GADs given by donors, but will also permit GADs to be given by an intermediary on a donor’s behalf.
The regulations require intermediaries to:
- keep a record of the donor’s authorisation allowing them to complete declarations on the donor’s behalf
- keep a record of the date on which the Gift Aid regime was explained to the donor
- keep a record of any cancellations of the donor’s authorisation
- issue an annual statement to donors who use the new process
- keep a record of an annual statement sent to donors who use the new process
The regulations also impose penalties on intermediaries for any breaches of these obligations.
Summary of impacts
Exchequer impact (£m)
| 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|---|
| - | negligible | -10 | -15 | -15 | -20 |
These figures are set out in table 2.1 of Autumn Statement 2016 as ‘Gift Aid: reforms’. These figures incorporate the Exchequer impact of ‘Gift Aid and intermediaries’, and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Statement 2016.
Economic impact
The measure is not expected to have any significant economic impacts.
The cost of this measure is calculated by accounting for the increased use of Gift Aid by donors.
Equalities impacts
No impacts are anticipated in respect of groups sharing protected characteristics.
Impact on individuals, households and families
This process will make it easier for individuals to give to multiple charities through digital channels.
The measure is not expected to impact on family formation, stability or breakdown.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on business and civil society organisations. It is anticipated that a small number of intermediaries will incur one-off costs to familiarise themselves with this policy and to put systems in place to implement the change.
The measure should ease the ongoing administrative burden on a small number of intermediaries by relieving them of the need to receive a Gift Aid declaration for each individual charity. There are up to 149,000 charities that are registered for Gift Aid (of which around 70,800 claimed Gift Aid in 2015 to 2016).
Operational impact (£m) (HM Revenue and Customs (HMRC) or other)
There is no expected impact in relation to cost for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change please contact Christopher Maudsley on Telephone: 03000 518538 or email: christopher.maudsley@hmrc.gsi.gov.uk.