Accounting for Small Charitable Donations

05 November 2013

Charities which collect small donations through, for instance, street or supermarket collections, can claim an extra 20% from the government.

The amount that can be claimed, in the tax year, is currently 20/80ths of the smallest of the following:

• £5,000

• The amount actually collected

• Ten times the amount donated to the charity, under gift aid

In order to be eligible to make a claim the charity must have made a successful gift aid exemption claim in two consecutive years in the previous four years. Small donations are defined as amounts of £20 or less, in coins or notes of any currency, given by an individual, in the United Kingdom, unconditionally and on which the donor cannot get tax relief in any other way.

If there is more than one connected charity, basically meaning different charities controlled by the same people, the £5,000 limit is to be divided amongst them equally.

There is an additional and separate limit for charities which run community buildings. Examples given in the Small Charitable Donations Act 2012, which became law in December 2012, are village halls, town halls or places of worship. This gives such charities a second £5,000 limit for each building from which they operate. Although all buildings on a single holding of land or on adjoining land are treated as a single building for the purposes of the act.

On another point, the old R68(I) repayment forms will no longer be accepted by HMRC after 30th September 2013, from that date either the online facility or the ChR1 paper form must be used. HMRC have indicated that repayments using the online facility will be made within 3 days, while using the paper form repayment will take 10 days.

H.M. Revenue and Customs have an online tool to help charities make claims for repayments, of all kinds: http://www.hmrc.gov.uk/charities/online/demonstrator.htm.

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