The current ‘benefit’ thresholds will be simplified into two levels – for donations under £100 and over £100.

Photo of donations sign

The Government has announced it will simplify the Gift Aid rules that govern the value of ‘benefits’ that charities can give to donors in return for their donations. The thresholds that determine the maximum permitted value of those benefits will be merged into two.

New rules

As it stands, there are three thresholds – depending on the size of the donation – that affect the maximum value of any benefit given. For donations up to £100, charities can currently offer benefits worth up to 25% of the payment; for donations between £100 and £1,000, the benefit value is capped at £25; and for the highest bracket – donations over £1,000 – the value of the benefit offered can be to up to 5% of the donation, up to a maximum annual benefit of £2,500.

Under the new rules:

  • For donations up to £100, a donor can receive a benefit of up to 25% of the donation
  • For donations of over £100, the donor can receive “a benefit of £25 plus additional benefit of up to 5% of the additional amount donated above £100”.

The maximum annual benefit value will continue to apply.

The changes will be introduced in the Finance Bill 2018-19, and the simplified thresholds will apply from 6 April 2019.

Consultation

The new rules have emerged from a public consultation in which less than a third of respondents favoured retaining three thresholds, and there was “very strong” opposition to a proposed single threshold. The two-threshold system was supported by most of the responding representative bodies.

A Government spokesperson explained the decision: “The government believes the two threshold proposal, which is widely supported in the consultation responses, gives the sector simplification without compromising the value of benefits that can be offered to donors.

“Most charities currently give benefits within the limits and are unlikely to be significantly affected by the proposed changes.”

Low value benefits

Proposals to introduce a ‘low value disregard’ to allow charities to make small gifts to donors have been rejected following the consultation. Respondents were asked for their views on whether such a disregard should be introduced, and if so, whether this should be set at a figure around £3 or £5.

Overall, a “significant number” did not support the idea, thinking it would be more complicated to administer and would benefit larger charities with greater buying power that would be able to secure lower prices.

Author(s):