Government introduces Small Donations Bill

As part of the Queen's Speech on 9 May, a Small Donations Bill has been introduced, will allow charities to claim top-up payments, similar to Gift Aid, on small donations totalling up to £5,000 a year without individual paperwork.

The Gift Aid Small Donations Scheme will allow charities to submit claims for payments of 25p for each £1 donated, on any number of donations of £20 or less, without needing Gift Aid declarations, up to £1,250 a year.

The scheme is intended to reduce the administrative burdens on small charities. HM Revenue & Customs expect the scheme to be used largely by small charities making collections and religious organisations taking collections. The government expects charities to receive about £85million a year through the scheme.

As there is no direct link between tax paid by a donor and the cash repaid to a charity, the scheme is considered to be public expenditure, not tax relief, and the government has therefore introduced a separate bill for the scheme rather than legislating for it in the Finance Bill.

An HM Revenue & Customs consultation on the details of the scheme opened in March and will continue until 25 May. To feed into One East Midlands response to this consultation click here.