Gift Aid Small Donations Scheme (GASDS)

The Gift Aid Small Donations Scheme (GASDS) allows charities and Community Amateur Sports Clubs (CASCs) to claim top-up payments on small cash and contactless donations of £30 or less, without needing to collect donors' details or Gift Aid declarations. This scheme works alongside regular Gift Aid and can significantly boost your organisation's income from small donations.

What is GASDS?

GASDS provides a way for charities and CASCs to claim top-up payments on small donations in much the same way as Gift Aid, but without the administrative burden of collecting Gift Aid declarations from donors. Since 6 April 2017, you can claim on donations made using contactless technology, such as contactless credit or debit cards. Before this date, only cash donations (coins or notes of any currency collected and banked in the UK) were eligible.

The top-up payment rate matches Gift Aid. When the basic rate of Income Tax is 20%, you can claim an additional 25p for every £1 donated. For example, if someone gives £30, you can claim a top-up payment of £7.50.

Eligibility requirements

To claim GASDS top-up payments for donations collected from 6 April 2017 onwards, your charity or CASC must meet two conditions:

• You must have claimed Gift Aid in the same tax year as you want to claim a GASDS top-up payment
• You must not have incurred a penalty on a Gift Aid or GASDS claim in the current or previous tax year

For donations collected before 6 April 2017, there was an additional requirement that your charity or CASC must have existed for at least two complete tax years (unless you had recently merged with another organisation).

What you cannot claim for

GASDS cannot be used for:

• Donations that already have a valid Gift Aid declaration
• Membership fees
• A £30 portion of a larger gift (you cannot artificially split larger donations)

Maximum claim limits

The maximum amount you can claim under GASDS is the lower of two figures:

• £8,000 worth of small donations (which equals £2,000 in top-up payments when basic rate Income Tax is 20%)
• 10 times the amount you receive in Gift Aid donations (known as the "matching rule")

The matching rule means you must have regular Gift Aid claims to maximise your GASDS benefit. For example, if you receive £100 in Gift Aid donations, you can only claim top-up payments on £1,000 worth of small donations under GASDS, which works out as £250 in top-up payments.

To satisfy the matching rule, you must make claims on both Gift Aid and small donations in the same tax year that you receive them.

Before 6 April 2016, the maximum limit was £5,000 worth of small donations per tax year, and between 6 April 2013 and 5 April 2016, this £5,000 limit applied.

Community buildings

If your charity has community buildings, you may be able to claim on more donations than the standard £8,000 limit. These rules do not apply to CASCs.

From 6 April 2017

If you're a charity with two or more community buildings, you can claim a maximum of £8,000 on small donations either:

• Collected anywhere in the UK, or
• For each community building, collected in the same Local Authority area as the community building you're claiming for

You can choose whichever option benefits you most. If you have fewer than two community buildings, it's better to claim on small donations collected anywhere in the UK.

Since 6 April 2017, you can claim top-up payments on small donations collected at any time—you do not have to collect them during a charitable activity, though the community buildings rules still apply.

Your community building must meet certain criteria:

• You cannot charge a fee to enter the building (or the part where charitable activities take place)
• Activities must include at least 10 people who will benefit
• Activities must take place at least 6 times a year
• Activities must be open to members of the public

There is no limit on the number of eligible community buildings a charity can have.

Connected charities and CASCs

If your charity or CASC is connected to another charity or CASC, you must share the small donations allowance between you. The shared amount is £8,000 from 6 April 2016 (previously £5,000).

You're considered connected if you:

• Have the same or very similar purposes and activities
• Are controlled by the same or connected people

Simply sharing a trustee does not make organisations connected if their aims and activities are largely different.

From 6 April 2017, connected charities can only claim on small donations collected in the same Local Authority area as their community buildings. However, if a group of connected charities would benefit more from sharing a single £8,000 allowance for donations collected anywhere in the UK, they can make an election to HMRC.

Connected organisations making GASDS claims need to use a schedule spreadsheet when submitting claims through Charities Online.

Merged organisations

The rules for merged charities changed from 6 April 2017.

For donations collected after 6 April 2017, you do not need to follow a special merging process. You can start claiming under GASDS immediately as long as you're also claiming Gift Aid in the same tax year.

For mergers that began before 6 April 2017, if you want to benefit from the Gift Aid compliance history of another organisation, you must write to HMRC no later than 90 days from the date you formed the new organisation. You must wait 60 days from formation before making your first Gift Aid claim.

Record keeping

You must keep records of small donations as evidence of your claim. Two people should ideally check and count the cash collected.

Your records should show:

• How much money was collected, including each denomination of coins and notes
• The date the money was collected
• That no individual donation was greater than £30

From 6 April 2017, if you've collected contactless donations, you need to keep the records produced by the contactless terminal.

Keep all records for 6 years from the end of the tax year to which they relate.

Sources

• Claim top-up payments for the Gift Aid Small Donations Scheme
• Schedule spreadsheet for connected charities' GASDS claims

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.