Gift Aid Small Donations Scheme
Your church could qualify for an extra £2,000 of funding each year through this Government scheme.
Most churches and charities will understand and be part of the Gift Aid scheme, using it to claim back Gift Aid where appropriate. In addition to the Gift Aid scheme, it is possible to claim Gift Aid on cash (loose or in an offering envelope) and on donations given through a contactless or chip and pin terminal. All donations must be collected and banked in the UK.
This scheme is called the Gift Aid Small Donations Scheme (GASDS). It has been in operation since April 2013. Subject to certain conditions, it allows for a Gift Aid style top-up to be claimed by churches on small cash donations.
In order to qualify for GASDS, you must be able to answer 'yes' to the following questions:
- Is your church registered as a tax charity with HMRC?
- Has your church made a successful Gift Aid claim in the same tax year as the proposed GASDS claim?
- Was the donation made in cash or via a contactless or chip and pin terminal and does it amount to £30 or less?
- Has the donation been made by an individual and not in exchange for goods and services?
The basic scheme
Churches can claim a payment equivalent to Gift Aid on cash and contactless or chip and pin terminal donations of £30 or less (subject to an overall limit per charity) without the need for the donor to be identified, complete any paperwork or be a taxpayer. This is good news for churches, with most now able to claim up to an additional £2,000 each year from HMRC without the need for much additional paperwork. In certain cases, where churches operate with additional buildings, this limit may be increased.
How much can be claimed?
The basic calculations for GASDS claims work in the same way as for Gift Aid: for each £1 of eligible donation, the charity will be able to claim a top-up of 25p from HMRC.
There is a maximum claim of tax on £8,000 worth of donations, i.e. a maximum of £2,000 of Gift Aid which can be claimed in a tax year through GASDS. However, this is subject to a minimum Gift Aid claim (not GASDS) of £800 having been made by the congregation in that tax year.
Your GASDS claim cannot be more than ten times your Gift Aid claim. For example, you can claim on £1,000 worth of donations through GASDS if you have received £100 of Gift Aid donations in the same tax year.
Please note that an identiﬁable donation from a donor who has signed a Gift Aid declaration cannot be included in GASDS. Cheques and standing orders are not eligible either, as GASDS is aimed primarily at the charity's unidentiﬁed donations. However, free-will oﬀering envelopes (where the donor has not signed a Gift Aid declaration, and where the donation is for £30 or less) are eligible, as are donations of £30 or less made through a contactless terminal.
Where a congregation uses more than one place of worship, then each of the buildings will qualify for claiming through GASDS on up to £8,000 in small donations providing they each have had six services/events with at least ten people attending each time in the year for which they are claiming. The building does not require to be a church building. It can be a public building which is used by the church for a range of purposes.
Please note that buildings on adjoining land are classed as one ‘community building', so many church halls will be not be eligible for additional GASDS claims.
Treatment of several donations given together from one donor
Where several individual cash donations have been given in a single envelope, if the church official is happy that these are clearly separate ‘small donations', and these donations are clearly stated as such, then they are eligible for GASDS subject to the normal rules. This also applies where separate envelopes have been used but given at the same time.
Therefore, if a member puts £200 cash in an envelope and marks it as 20 weeks of £10 weekly donations for the occasions where they have not been able to make a regular cash offering, HMRC is content that the gift is eligible under GASDS. Alternatively, twenty separate envelopes with up to £30 in cash in each can be included as these are clearly separate donations. Please remember that only cash and contactless or chip and pin device donations are eligible for GASDS. Cheques and other electronic payments are NOT eligible.
All claims under GASDS must be made within two years from the end of the tax year in which the donations were collected. Remember that this is the tax year and not your accounting year end (where this is diﬀerent). For example, money donated in the year to 5 April 2020 (ie from 6 April 2019) can only be claimed on until 5 April 2022.
You need to keep records of small donations as evidence of your claim. Two people should, ideally, check and count the cash collected. You should record: how much money was collected, including the denomination of notes received; the date the money was collected; and that no individual donation was greater than £30. This money needs to be banked (in a UK bank) to be eligible,ie the treasurer cannot keep some of it for petty cash. If you have collected donations via a contactless or chip and pin terminal, you will need to keep the records produced by that system in order to note how much was collected in a particular Local Authority area and to monitor for any ‘multiple donations' from the same person. All records should be kept for six years from the end of the tax year to which they relate.
Please note that, for auditing purposes, HMRC recommends that the charity keeps a minimum of one month's envelopes per tax year, covering a period of four years. For example, a church may decide to keep every general giving envelope received throughout the month of August. After a period of four years the church will have in place a total of four months' envelopes, all received during August for the preceding four years.
How do we apply?
You can claim by completing an online form for both Gift Aid and GASDS. HMRC updates its website regularly.
Detailed guidance on GASDS can be found on the UK Government website.