The government is going ahead with rules to support charities with a Gift Aid measure to simplify the donor benefits rules, due to come into force from April 2019, pending approval of draft Finance Bill 2018-19
The proposals, now in their final draft format and out for consultation, will replace the current mix of monetary and percentage thresholds that charities have to consider when determining the value of benefit they can give to their donors without losing the entitlement to claim Gift Aid tax relief on the donations given to them.
This clause simplifies the number of thresholds and changes the limits on the value of benefits that can be given to donors without affecting the Gift Aid qualifying status of a donation to a charity. The changes will apply in relation to gifts by individuals and payments by companies made to charities on or after 6 April 2019.
This follows consultation on the government plans to reform Gift Aid, which proved controversial, particularly as one of the options was to introduce a single threshold. This was strongly opposed by the majority of respondents, representing a mix of 37 charities and professional bodies, who responded to the consultation. Many charities felt that although a single threshold system would be simple, it would be detrimental to many charities that subsist on a large number of small donations.
The government believes the two threshold proposal will give the sector simplification without compromising the tax benefits that can be offered to donors. This is part of general efforts by government to reduce the complexity of the Gift Aid compliance rules for charities. Recent improvements include the introduction of online filing of Gift Aid claims and a shorter, simpler Gift Aid declaration form.
Thresholds
From April 2019 the benefit threshold for the first £100 of the donation will remain at 25% of that amount. Charities can offer an additional benefit of 5% to donors on the amount of the donation that exceeds £100. The total value of the benefit that a donor can receive remains at £2,500.
The measure will have effect in relation to gifts and payments made on or after 6 April 2019.
Gift Aid income tax relief provisions are in Part 8, Chapter 2, of Income Tax Act 2007 and s197 of Corporation Tax Act 2010.
The draft legislation is out for comment until 31 August 2018.
Policy paper, Simplification of donor benefits rules for Gift Aid (includes link to draft legislation) issued 6 July 2018
Report by Sara White