Stewardship Briefing Note 2017/1
GASDS: a change in the rules
for donations received
after 6 April 2017
March 2017
Stewardship, 1 Lamb’s Passage, London EC1Y 8AB
t: 020 8502 5600 e: [email protected] w: stewardship.org.uk
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Stewardship
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Introduction
The Gift Aid Small Donations Scheme, perhaps better known as GASDS has been with us since 6
April 2013. Although widely welcomed at the time, the take-up by charities has been far below what
the government intended. For example, the 2014/15 tax year saw £27 million of GASDS top-up
claimed which may sound significant but is some 70% below the original estimate of £135 million set
by the government.
The findings of a survey undertaken in 20161 suggested that a significant number of charities
remained unaware of the scheme, and that for others the eligibility criteria was considered to be
restrictive and was a barrier and a burden. Stewardship continues to urge churches to make use of the
scheme, even more so since for donations received after 6 April 2016 the limit for GASDS claims was
increased from the original £5,000 donation limit per tax year to £8,000 per tax year. This means that
under the GASDS, churches can claim up to £2,000 each tax year (even more if they meet in more
than one location); real money that can make a real difference.
This paper (which should be read in conjunction with our previous two GASDS papers) seeks to
explain the changes to the scheme which apply to donations received after 6 April 2017; changes that
are proposed to make the scheme easier for churches and other charities to operate and as a result
increase the amount paid out to the charity sector. The changes to the GASDS are contained within
the Small Charitable Donations and Childcare Payments Act 2017.
This is an interim paper and so does not set out to cover every aspect of the Scheme and readers
should therefore refer to our earlier papers to see expanded comment and definitions of certain
GASDS concepts and principles. A version of both papers incorporating these changes will be
available on the Stewardship website by the end of April.
Donations received after 6 April 2017: the changes at a glance
What has changed?

The two year eligibility period for start-up charities has been removed;

The Gift Aid history requirements have been removed;

Contactless payments are now included under the scheme;

There are changes to the way that the community buildings allowance is exercised which is likely
to be relevant to churches;

The scope of community buildings has been extended to include donations received within the
same Local Authority Area as the building itself.
1
Undertaken on behalf of the Institute of Fundraising, NCVO & CFG.
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What has not changed?

The small donations limit remains at £20 per gift;

The basic criteria for determining what represents a community building (see later).
The rules for gifts received after 6 April 2017 in more detail
Charity eligibility
Most of the requirements necessary to be an eligible charity have fallen away for donations received
after 6 April 2017. The need for new charities to have completed a two year ‘start-up period’ (that is
two years after being accepted by HMRC as a ‘tax charity’) has been removed, as has the need to
have made successful Gift Aid claims in at least two of the past four years.
The only remaining requirement to be eligible to submit a claim under the Scheme is that a charity
must not have received a penalty under Section 24 of the Finance Act 2007 in relation to a Gift Aid or
GASDS claim in either the tax year of the donation or in the previous tax year. Such penalties are rare
amongst churches.
The new eligibility rules open the way, for newly formed churches and church plants gaining
independent status, to become eligible for the Scheme from the outset. We see both of these as
welcome changes.
What you can claim?
There remain a number of factors to consider when answering the question of how much your church
can claim by way of GASDS.
I.
The basic rate of income tax
Although top-up repayments under GASDS are not repayments of tax paid (many cash donors may
not even be taxpayers), the way that a top-up claim is calculated mirrors that for Gift Aid and as such
the basic rate of income tax forms the basis of that calculation. The calculation of the top-up
repayment is fairly straightforward:
Top up repayment = Small donation x basic rate of income tax/(100 – basic rate of income tax).
So, whilst the basic rate of income tax is 20%, the calculation is:

Top up repayment = Small donations x 20%/(100% - 20%) which becomes

Top up repayment = small donation x 20%/80% simplifying to

Top up repayment = small donation x 0.25
So a gift of £10.00 will attract a top-up repayment of £2.50.
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II.
The amount of eligible small donations collected
The basic rules applying to eligible donations have not been amended other than to allow contactless
donations from a card, mobile phone or other device to be included. This does not extend to other
types of debit or credit card transactions. So in summary to be eligible:

The gift must be made in the UK;

The gift must be in cash (notes and coins – of any currency) or contactless from a card, mobile
phone or other device;

Cash donations must be deposited into a UK bank or building society account;

Contactless donations must be credited to a UK bank or building society account;

Donations must not be made under a valid operating Gift Aid declaration.2 Any such donations
must be included in a Gift Aid claim and not in a GASDS claim;

Donations must be for £20 or less. This is not always obvious, but donations will be considered
eligible if the charity has taken reasonable steps to apply the limit. Such steps might include:
III.
o
Providing clear instructions to those collecting and recording donations;
o
Excluding donations from non-individuals;
o
Excluding donations that are not banked (i.e. used to pay expenses etc.);
o
Excluding donations in denominations higher than £20;
o
Excluding donations which are evidently higher than £20 e.g. 2 X £20 notes folded together;
o
Excluding gifts where claims should be made under the Gift Aid scheme.
The GASDS cap and community buildings
For churches which operate from community buildings, the rules have changed.
First, for any charity with less than two community buildings (see below) the maximum donation cap is
£8,000 of eligible donations in any tax year collected anywhere in the UK. This situation will cover
many churches that meet in a single location, be that a church building or another community
building e.g. a school, cinema or other eligible building.
2
As there is no cap on the amount of donations eligible for Gift Aid, we would continue to urge churches to make full use of
the Gift Aid scheme first, and in preference to, the GASDS.
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Second, where charities have more than one community building (see below) the charity now has a
choice to make. They can either claim:

Up to £8,000 of eligible small donations per community building3 or, if more, and generally this
will be unlikely;

A single allowance of £8,000 per charity for eligible small donations collected anywhere in the
UK.
What makes a community building?
In brief, a community building is one which the charity uses to deliver charitable activities to groups of
10 or more beneficiaries on at least six occasions during the tax year. Church buildings used to hold
worship and other services will normally qualify as community buildings and for churches, employees
and volunteers can be counted as beneficiaries in reaching the minimum 10 limit. Generally,
residential properties and commercial retail buildings will not normally qualify as community buildings
at all, although if your church has exclusive right to a commercial building or a segregated section of
it, then the building is still likley to qualify.
For example a church:

With exclusive use of a cinema or theatre should see that building qualify as a community building;

Renting a segregated room in a restaurant should see that building qualify as a community building;

Meeting in the corner of a café will not see that building qualify as a community building.
Making the right choice (see Appendix 1)
Given the way most churches operate, with almost all donations collected inside church buildings
(with the occasional offering box situated outside), then it is difficult to imagine a situation in which
opting for a single allowance would produce a better outcome than following the community buildings
option.
This is especially true as for donations received after 6 April 2017 outside a community building but
still within the same Local Authority Area as the builidng, can be added to donations received in the
community building itself.
So for example, Church A operates from two community buildings in different Local Authority Areas
and has also received donations in a local shopping centre following a street theatre event. So long as
the shopping centre is in the same Local Authority Area as one of the community buildings, any
eligible small donations received in the centre can be added to donations received in the community
3
Donations included with community building now extend to include donations collected anywhere in the same Local
Authority Area in which the building resides. In England this will normally be a district council or a London borough; in Wales
a county council or county borough council; in Scotland a council constituted under S3 of the Local Government (Scotland)
Act 1994; in Northern Ireland a district council constituted under S1 of the Local Government Act (Northern Ireland) 1972.
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building up to the maximum cap of £8,000 per building. Donations can’t be added to the community
building that is in a different Local Authority Area from the shopping centre.
More than one community building in the same Local Authority Area
Where a charity has more than one community building in the same Local Authority Area, and
receives other donations in that same Area it can choose which building to add the external donations
to, thereby allowing the charity to make the best use of the allowance for each building.
So using the example of church A above. If both buildings and the shopping centre are all within the
same Local Authority Area, the church can add the donations received in the centre to whichever
building it wishes, even splitting the donations between both if that provides the best outcome.
However, where donations have been received inside a community building itself, these donations can
only be applied to that specific community building. Donations made inside one building can’t be
transferred to another building regardless of location.
IV.
The Gift Aid restriction
The maximum amount of the GASDS top-up that a charity can claim is limited to 10 times the
amount of Gift Aid claimed on donations made in that same tax year under the Gift Aid scheme. So,
in order to be able to claim top-up on the full £8,000 under the GASDS, your church would have to
be claiming Gift Aid on donations made during the same tax year of at least £800 (£8,000 / 10). It
does not matter if the Gift Aid claim itself is delayed, provided that the claim is made to HMRC before
the GASDS two year time limit expires; it is the donation date that is important.
V.
Connected charities
There are special rules which apply to connected charities. Charities are connected if at any time
during the tax year the same person (or connected persons) has control over them and the charities
have the same or very similar purpose.
As we do not see this situation applying to many churches, we have explored the rules about
connected charities in more detail in Appendix 4.
Administration and record-keeping
As nothing here has really changed, neither has our basic advice which is to keep good records so
that you can easily confirm and evidence:

The guidelines provided to those people counting or administrating cash donations;

The numbers of people attending services and other charitable activities in cases where numbers
in some community buildings may be close to the 10 minimum;

That donations have been banked in a UK bank or building society;
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
The address of the community building in which the donation was received;

The date that the donation was received;
And now, in addition:

For donations received outside of a community building, the location (including postcode if
possible) where the donation was received.
The GASDS claim is made alongside the main Gift Aid claim.
Conclusion
Although simple in concept and further simplified by these changes, the GASDS does still have a
number of quirks, most especially community buildings, which have to be worked through. However,
with a sensible level of record keeping and a little thought, most churches should be able to embrace
the Scheme being better off as a result.
We would urge any churches that have not yet done so, to look again at the GASDS and where
possible to make a top-up repayment claim as soon as possible.
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Appendix 1: unconnected church GASDS decision flow chart
Has your church been charged with a penalty Section 24 of the Finance
Act 2007 in this tax year or the one before?
No
Yes – you are not able to claim
GASDS in the current year
How many community buildings does your church have?
0-1
You can claim a top-up on small
donations up to £8,000 this tax year
collected anywhere in the UK.
2 or more
You can claim top-up on up to
£8,000 per community building
which includes donations received in
the same Local Authority Area as
the building
Or you can choose to claim a single
£8,000 of eligible small donations
collected anywhere in the UK
Either claim is limited to 10 times the amount your church has claimed on Gift
Aid on donations made during the same tax year.
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Appendix 2: worked examples
Note: All examples assume a basic income tax rate of 20% and that churches have not been subject
to a penalty under Section 24 of the Finance Act 2007 in this tax year or the one before.
Example 1 – scenario
Church B holds all of its services and other meetings in a single building which it owns. During the tax
year 2017/18 it received £7,500 in cash offerings. The church is aware that included in the £7,500:

one person made a gift of £100, with 5 x £20 folded together;

10 x £50 notes have been collected;

A gift of £500 could be identified to a donor for whom the church has a valid Gift Aid declaration
in place;

The church has used £20 per week from the offering to directly reimburse expenditure on flowers.
This money has not been paid into a UK bank account.
In addition, the church receives donations eligible for Gift Aid for £20,000 in the same tax year,
although it does not submit a Gift Aid claim until April 2018, after the 2017/18 tax year has
concluded. How much GASDS repayment top-up can church B claim?
Thought process
As the church has only one community building its claim is limited to a maximum of £8,000 on
donations collected anywhere in the UK. Of the £7,500 received, the following items must be
excluded.

The obvious gift of £100 – total amount excluded £100;

The 10 x £50 notes as these can’t represent a gift of £20 or less – total amount excluded £500;

The £500 as this should be claimed under the valid Gift Aid declaration which remains in force –
total amount excluded £500;

The £20 per week used to pay for the flowers as this has not been banked and therefore is not
eligible to be included4 - total amount excluded £1,040.
The excluded amounts are therefore £100 + £500 + £500 + £1,040 meaning that £2,140 of the
£7,500 can’t be included in a GASDS claim; removing these items results in eligible cash donations of
£5,360 (i.e. £7,500 - £2,140). There is no further restriction as a result of the Gift Aid multiplier as
4
There may be some weeks where you could legitimately say that the £50 donation has been used to purchase the flowers –
excellent records will be required to demonstrate that this is the case.
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Gift Aided donations given during the 2017/18 tax year total £20,000, far in excess of the minimum
£536 of donation required to claim the GASDS in full.
It makes no difference that the Gift Aid claim is not made until the following tax year, as this remains
well within the two year tome limit for GASDS claims, and so the top up repayment for church B under
the GASDS is £5,360 x 0.25 = £1,340.
Example 2 - scenario
Church C has two congregations (each numbering around 100 people) meeting in different venues in
the town. The church encourages its congregation to make donations to Stewardship so that it does
not have to handle the Gift Aid administration. Cash offerings in building 1 amounted to £1,250 and
in building 2 to £2,200 for the 2017/18 tax year. All cash offerings are banked and the church is not
aware of any ineligible gifts within the cash received.
Thought process
Because church C does not receive any donations under the Gift Aid scheme, it will fall foul of the 10
x Gift Aid restriction rule. If the church does not make a Gift Aid claim, then it will not be able to claim
any repayment top-up under GASDS either.
However, whilst the church could continue to benefit from Stewardship’s Gift Aid administration, it
could arrange for a small number of donors (likely to only need 1 or 2) to make donations directly to
the church totalling £345 (i.e. (£1,250 + £2,200) / 10) thereby enabling a GASDS claim of £862.50
(£3,450 x 0.25) to be made.
Example 3 - scenario
Church D has two congregations (each numbering around 100 people) meeting in different venues in
the town. The church encourages its congregation to make donations via direct debit and under Gift
Aid. Cash offerings in building 1 amounted to £1,250 and in building 2 to £2,200 for the 2017/18 tax
year. All cash offerings are banked, and the church is not aware of any ineligible gifts within the cash
received. It also claims Gift Aid on donations received in 2017/18 of £20,000.
During the year, the church choir sung at a number of shopping centres in the county and received
small cash donations of £4,750. Of this, £3,750 was received from events held within the same Local
Authority Area as the two church buildings, with the remainder collected from events further afield
and outside of the Local Authority Area of the church buildings.
The church also holds quarterly prayer meetings in a private home within the same Local authority
Area as the church buildings during which donations of £400 have been received.
Thought process
Church D will not be restricted by the Gift Aid limitation in the same way as church C above. However,
it does have a decision to make. It can either claim a maximum of £8,000 per community building, or
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opt for one basic core allowance of £8,000 for all donations collected anywhere in the UK (see
appendix 1).
If the church opts for the community building claim, then it will be able to claim the £1,250 and
£2,200 donated in each building and can add to that the £3,750 received from the choir events held
within the same Local Authority Area and the £400 received from the prayer meeting also within the
same Local Authority Area5. This means that in total a top-up repayment can be claimed on
donations of £7,600 (i.e. £1,250 + £2,200 + £3,750 + £400) making a total top-up repayment of
£1,900 (i.e. £7,600 x 0.25).
However, if the church was to opt for the single allowance, it could include donations received from
anywhere in the UK, specifically including donations from outside the Local Authority Area. As a
result, its only limitation would be the £8,000 allowance cap, enabling a top-up repayment claim of
£2,000.
By choosing the single core allowance option, church D could claim an extra £100 in GASDS
repayment top-up.
5
Note: the claim for the donations received at the prayer meeting is based on the meeting being held in the same Local
Authority Area as the church’s community buildings and not claiming the private home to be a community building in its
own right.
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Appendix 3: connected charities in more detail
If a church is connected to another charity this will affect the amount of GASDS top-up that your
church can claim. In this sense connected means that at any time during the tax year:

The same person (or connected persons6) has control over those charities; and

The charities have the same or very similar purpose.
Charities are generally connected where one or more of the following situations applies:

One charity is controlled by another;

Two or more charities are under common control;

Control links a group of charities together.
However, just because charities are connected, for that connection to impact a GASDS claim the
charities must also have the same or substantially similar purposes and activities. From a church
perspective this does not mean that if both charities have the advancement of the Christian faith as
their charitable purpose they are necessarily connected for GASDS. If those two charities undertake
substantially different activities in reaching that goal no GASDS connection exists.
For example, a church which runs community projects in their town as separate individual charities
may be connected in the sense that the same people are trustees of a number of them; they may
share the same purpose of advancing the Christian faith; but because the community activities
undertaken by each are substantially different they may not be connected for GASDS purposes.
Where two or more charities are connected and neither runs charitable activities in a community
building, they must elect to share a single £8,000 limit between them. In this situation, the community
buildings option is not available.
Where at least one of the connected charities runs charitable activities in a community building, then
it would normally claim under the community buildings rules, claiming up to £8,000 for donations
received in each community building or surrounding Local Authority Area.
In effect, the connected charities are treated as if they are a single charity and the GASDS rules are
applied to them as if that were the case. So in the rare event that the connected group of charities
would be better off making use of a single allowance of £8,000 shared between them rather than
following the community buildings option they can elect to go this route by giving the appropriate
notice to HMRC.
6
As defined in S993, Income Tax Act 2007
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Appendix 2: connected church GASDS decision flow chart
Has your church been charged with a penalty Section 24 of the Finance
Act 2007 in this tax year or the one before?
No
Yes – you are not able to claim
GASDS in the current year
Have all the connected charities in your group elected to share a single
£8,000 limit for that tax year and sent notice to HMRC accordingly?
Yes
No
You can claim a top-up on small
donations up to your agreed share
of £8,000 this tax year collected
anywhere in the UK.
Does any charity in the group run
charitable activities from a
community building?
This limit will be subject to the 10
times Gift Aid rule.
Yes
You can claim a top-up on small
donations up to 8,000 per building
extended to include donations
received in the Local Authority
Area.
This limit will be subject to the 10
times Gift Aid rule.
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No
You cannot claim GASDS in this tax
year. If there are no community
buildings in the connected charity
group a “sharing notice” election
must be made to be able to make a
claim.
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