MANY churches are currently facing severe financial pressures as a direct result of COVID-19.
In short, traditional income streams from lettings and face-to-face fundraising have dried up.
Concerns have been raised about the operation of the Gift Aid small donations scheme (GASDS) during the coronavirus crisis, given that many eligible cash donations could be lost.
This issue has been specifically raised as an area of concern for churches – as well as other small charities – by the Charity Tax Group (CTG), which makes representation to the government on charity taxation issues.
From a church’s perspective, donors that would ordinarily make small donations each week are asking if they can keep aside the individual donations that they would normally give and make them separately once the crisis is over, above the standard £30 limit.
Receiving cash donations by post does not provide a solution as churches run by volunteer treasurers are frequently not able to bank any cash donations received during the lockdown due to restrictions on gatherings and essential travel.
CTG urged HMRC to introduce some temporary flexibility in the operation of the GASDS scheme by accepting multiple cash donations of £30 or under that have been saved up during the crisis.
The submission noted that ultimately the cap on eligible donations would remain at £8,000, so there would be no additional cost to the Exchequer.
HMRC officials responded to CTG stating: “In respect of GASDS, guidance on the eligibility for donations for inclusion in this scheme is clear in stating that claims can only be made on cash donations of £30 or less; and contactless card donations of £30 or less collected on or after 6 April 2019. “The decision over what constitutes an eligible donation is one for the church/charity to make for themselves, rather than for HMRC, but the conditions for something to be considered a ‘small donation’ are clearly set out in legislation.
“Where it is the case, for example, of separate donations being given in a single envelope, then if the church/charity official is happy these are clearly separate ‘small donations’ (and clearly stated as such) then they will be eligible for GASDS, as is the case where separate envelopes are used.”
This guidance has been widely welcomed as “a welcome and pragmatic clarification from HMRC officials”, recognising the practical difficulties raised by COVID-19.
If, for example, a church member puts £200 cash in an envelope and marks it as ten weeks of £20 weekly donations for the occasions where they have not been able to make a regular cash offering, it appears HMRC would be happy for the church to regard them as eligible donations under GASDS.
Alternatively, ten separate envelopes with more than £30 could be included where these are clearly separate donations.
CTG writes: “Thinking about practical next steps, charities and churches could also help to make it easier to distinguish such gifts by providing separate collecting plates/donation receptacles reserved for saved-up donations when the lockdown restrictions are eased.”
For more information about CTG click here.
