The Future Of Gift Aid

Conversations are underway between the Charity Tax Group ('CTG') and HMRC in respect of a potentially major reform to the operation of the gift aid rules, particularly in connection with donations which give rise to benefits to the donor.

The first full scale public meeting to discuss these ideas took place on 17 June 2014. The general purpose is to try to simplify the donor benefit rules and remove the 'cliff edge' effect of inadvertently breaching the limits on individual donations. This may prove to be achievable by broadening the range of benefits which are treated as not having any value, and then introducing an allowance for true benefits rather than a threshold. The allowance means that the designated level of benefits will be ignored from the point of view of Gift Aid, but anything exceeding that level will have to be netted off the Gift Aid claim figure in one way or another. This could remove the on/off nature of Gift Aid which causes headaches to fundraisers in seeking to set the right level of benefits without exceeding the threshold and losing all of the Gift Aid. It would only work on a pooled basis, that is, that the donations across the charity as a whole would be measured against the value of benefits provided across the board (not to each individual). This 'pooling' is intended to make the system easier to operate by removing the need to analyse each individual donation.

The meeting was an opportunity to point out issues relating to defining benefits to be 'disregarded' and it was noted that HMRC appeared to be retreating already from this idea, because they thought it was a possible source of complexity and dispute. There was also a debate over how to value benefits, and whether to do so on 'cost' of provision was particularly simple. The view was that there were significant potential complexities to a cost basis, and that in some...