Detailed guide: Claiming a top-up payment on small charitable donations

Overview

The Gift Aid Small Donations Scheme (GASDS) allows eligible charities and community amateur sports clubs (CASCs) to claim top-up payments on small donations of £20 or less.

Before 6 April 2017, you could only claim on small cash donations. Cash donations can be in coins or notes of any currency that have been collected and banked in the UK.

From 6 April 2017, you can also claim on donations made using ‘contactless’ technology, such as a contactless credit or debit card.

You don’t need to know the identity of the donors or collect Gift Aid declarations, which makes it easier to claim on donations like street collections.

Work out if your charity or CASC is eligible

The eligibility rules for charities and CASCs have been simplified.

To claim under GASDS before 6 April 2017 you must:

• have claimed Gift Aid in the same tax year as you want to claim a GASDS top-up payment (you can now claim tax on Gift Aid donations and a GASDS top-up payment on small donations at the same time)
• have not incurred a penalty on a Gift Aid or GASDS claim in this or the last tax year
• have existed for at least 2 complete tax years, unless your charity or CASC has recently merged with another

For small donations collected on or after 6 April 2017 the rules were simplified and to be eligible to claim under GASDS, your charity or CASC must:

• have claimed Gift Aid in the same tax year as you want to claim a top-up payment (you can claim tax on Gift Aid donations and a top-up payment on small donations at the same time)
• not have incurred a penalty on a Gift Aid or GASDS claim in this or the last tax year

You can’t claim on:

• donations that come with a valid Gift Aid declaration
• membership fees
• a £20 portion of a larger gift

There are other rules that affect the amount you can claim on, which are explained on this page.

How GASDS claims are worked out

GASDS claims are calculated in the same way as Gift Aid.

Where the basic rate of income tax is 25%, a small donation income of £8,000 will entitle you to a GASDS top-up payment of £2,000.

Between 6 April 2013 and 5 April 2016, the maximum amount of small donations top-up payments was £5,000 per tax year, the top-up payment was only £1,250.

From 6 April 2017, the maximum amount of small donations top-up payments is the lower of:

• £8,000
• 10 times the amount of donations you’ve claimed Gift Aid on

This is known as the ‘matching rule’.

To satisfy the matching rule, you must make claims on Gift Aid and small donations in the same tax year that you received them. The tax year is 6 April to 5 April, even if your own accounting year is different.

Example

If you received £100 in Gift Aid donations, you could claim a top-up payment on £1,000 worth of small donations.

If a charity has a community building they may be able to claim on more donations than the £8,000 limit.

Community buildings

A community building is a building that the public (or a section of the public) have access to at some or all times. This could be a village hall, town hall or a place of worship.

Any part of a building that is used mainly for the sale of goods or for living in is not a community building.

However, if you have exclusive use of part of a building to carry out your charitable activity, such as a meeting room in a hotel, then the meeting room can be treated as a community building.

Charitable activities for at least 10 members of the public must be held in community buildings at least 6 times in a tax year (6 April to 5 April) for a building to qualify as a community building.

The community building rules do not apply to CASCs.

Collections in community buildings from 6 April 2017

From 6 April 2017, charities with more than 1 community building can only claim either:

• a maximum of £8,000 on donations collected anywhere in the UK
• a maximum of £8,000 for each community building on donations collected in the same Local Authority area as that building

Charities with fewer than 2 community buildings should claim on small donations collected anywhere in the UK.

Charities with 2 or more community buildings can choose the option that benefits them the most.

Charities that choose to claim a GASDS top-up payment under the community building rules can now claim on donations collected at any time (not just during a charitable activity) as long as they were collected in the same Local Authority area as the building that they are claiming for.

Collections in community buildings before 6 April 2017:

You can claim a top-up payment on small donations collected during charitable activities held in a community building, for example a church, a cathedral, a town hall, a mosque, a synagogue or a village hall.

You can continue to claim top-up payments on donations collected before 6 April 2017 until the end of the second tax year after the donation was collected.

For example, you can claim top-up payments on donations collected at any time during tax year 2015 to 2016 until 5 April 2018.

Charitable activities must be held in community buildings at least 6 times in a single tax year (6 April to 5 April) to qualify.

Charitable activity held in a community building must:

• include at least 10 people who’ll benefit from the charitable activity
• be open to members of the public

You can’t charge a fee to enter the building, or the part of the building, in which the activity takes place.

Activities carried out primarily for the purposes of fundraising, such as jumble sales, concerts and dinners, don’t count as charitable activities and aren’t eligible.

There’s no limit on the number of eligible community buildings that a charity can have.

Your charity could claim on up to £24,000 in one tax year if your charity 2 community buildings, made up of:

• a maximum of £8,000 of small cash donations collected in each community building
• a maximum of £8,000 of small cash donations collected elsewhere, such as a street collection

Example

In one tax year, an animal welfare charity collected:

• £4,000 in collection boxes around the town
• £2,500 of small donations during its monthly charitable activities held in a village hall
• £1,200 of small donations collected during charitable activities held every other month in a local church hall

The charity could claim top-up payments on all three collections.

The limit on small donations income was £5,000 on cash donations collected in each community building and £5,000 collected elsewhere per tax year between 6 April 2013 and 5 April 2016.

If your organisation is connected to another charity or CASC, other rules apply.

Connected charities and CASCs

If your charity or CASC is connected to another charity or CASC, you can pool small cash donations. The small donations amount that connected charities can share is:

• £5,000 before 6 April 2016
• £8,000 from 6 April 2016

On donations collected after 6 April 2017, connected charities can only claim on small donations collected in the same Local Authority area as their community buildings.

However, if the group of connected charities would be better off sharing a single £8,000 allowance for donations collected anywhere in the UK they can choose to do so by making an election to HMRC.

You’re connected if you:

• have the same or largely the same purposes and activities
• are controlled by the same or connected people

If one of your trustees is also a trustee for another charity or CASC, but the aims and activities of each organisation are largely different, then the 2 organisations are not considered connected.

Claiming GASDS if you’ve merged with another charity or CASC

From 6 April 2017, the rules about merging were simplified. If your merger began before 6 April 2017, you still need to follow the merging process.

Mergers from 6 April 2017

For claims relating to donations collected after 6 April 2017 you don’t need to follow the merger process because you no longer need to have a Gift Aid history.

You can start claiming GASDS straight away as long as you are also claiming Gift Aid in that tax year.

Mergers before 6 April 2017

If you merged with another organisation to continue the activities of the previous charity or CASC before 6 April 2017, you must apply to HM Revenue & Customs (HMRC) to benefit from the Gift Aid compliance history of the other organisation by telling HMRC:

• no later than 90 days from the date you formed the new organisation
• 60 days before the new charity or CASC can make its first Gift Aid claim – HMRC will issue a certificate to show that your charity has taken over the activities of an old charity or CASC and the tax year that you will be eligible to make a claim for.

If you wish to take on the Gift Aid compliance history of another organisation, you must tell HMRC in writing.

The address is:

You can start claiming GASDS straight away as long as you are also claiming Gift Aid in that tax year.

Keeping records

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

• 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 £20

From 6 April 2017 if you have collected contactless donations you will need to keep records produced by the contactless terminal to show:

• how much money was collected
• the date the money was collected
• that no individual donation was greater than £20

Keeping records for community buildings

Some of the rules on keeping records of small donations collected during charitable events in community buildings were changed from 6 April 2017.

You can now choose to claim top-up payments on donations collected in the same Local Area authority as a community building – these can be collected at any time, not just during charitable activities.

This change affects how you should keep records from 6 April 2017.

Keeping records on donations from 6 April 2017

From 6 April 2017 if you choose to claim on amounts collected in the same Local Authority area as your Community Building you will need to keep a record of:

• the address and postcode of the community building
• the address (or addresses) where the donations were collected and the date of each collection
• how and when that building met the charitable activity requirements

Keeping records on donations before 6 April 2017

Before 6 April 2017, if you collected small donations in a community building during a charitable activity, you must record:

• the address and postcode of the community building
• the type of charitable activity
• an estimated number of beneficiaries who attended each charitable activity

How to make a GASDS claim

You must claim on small cash donations within 2 years from the end of the tax year that you collected them.

To claim online, you’ll need to register for Charities Online.

Use the Charities Online form to make a GASDS claim. You must give the total amount of the small donations you’re claiming on.

You may need:

• a community buildings spreadsheet to show the amount of small donations collected in a community building in a tax year
• to install compatible software to help you fill in your claim online

To apply by post, you’ll need to contact HMRC on Telephone: 0300 123 1073 and request form ChR1.

If you receive an overpayment, include the incorrect amount that you received on your next claim. This amount will then be deducted from your next repayment.