Reforming Gift Aid for digital giving

Categories: Community Engagement.

As announced in the 2013 Budget, the government has launched a consultation on how to increase take-up of Gift Aid on digital donations, as well as other improvements to Gift Aid.

Gift Aid allows charities to reclaim tax on any donation paid by an eligible donor. Because Gift Aid is a tax relief, there will always be a need for information to pass between the donor, the charity and HM Revenue & Customs, through what is known as the Gift Aid declaration. However, the Treasury has made a number of proposals on how the rules around the declaration could be modified to simplify digital giving.

Key proposals include:

  • shortening the Gift Aid declaration by removing the requirement to explain to the donor that they must have paid enough tax to cover the donation
  • allowing organisations that process digital donations to collect and pass on Gift Aid or the declarations to charities.

The consultation document also asks for views on other changes that could be made to Gift Aid, such as the introduction of a universal Gift Aid declaration database. The Treasury is also interested in information on the barriers charities experience in attracting Gift Aid on donations and ideas for generating interest in and awareness of Gift Aid more generally.

Sajid Javid, Economic Secretary to the Treasury, said: “Britain is a generous country and the amount of giving is something we should be deeply proud of, especially in these challenging times. The government has already introduced radical changes to to encourage donations, but we can do more. I am determined to build a Gift Aid system fit for the 21st century so that more money goes to charitable causes. Quite simply, I want to see Gift Aid claimed on as many donations as possible. I look forward to hearing ideas from the charitable sector so that we can look towards the future of Gift Aid.”

The consultation is open until 20 September 2013

HM Treasury and HMRC officials will also be holding a series of consultation meetings over the summer to explore the proposals in more detail with charities, intermediaries and their representative bodies.

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