Overview

This bill aims to provide financial support to eligible charities that receive small donations. It introduces a "top-up payment" scheme where the government supplements these small donations, encouraging charitable giving.

Description

The Small Charitable Donations Bill establishes a system of "top-up payments" from HM Revenue and Customs (HMRC) to eligible charities. To qualify, charities must meet specific criteria:

• Eligibility: Successfully claimed gift aid exemption in at least two of the previous four tax years, and their start-up period must have ended.
• Small Donations: Receive donations of £20 or less in cash, collected in the UK, deposited in a UK bank account, not eligible for gift aid, and not subject to repayment conditions.
• Connected Charities: The bill addresses top-up payments for connected charities, allocating the specified amount (£5,000) amongst them, and the bill also defines connected charities.
• Charities in Community Buildings: The bill provides a modified calculation for charities running charitable activities in community buildings (village halls etc.), considering donations from group members in these locations.
• Mergers: The bill outlines procedures for handling top-up payments when charities merge, ensuring the new entity can continue to claim.
• Top-up Calculation: The top-up payment equals the small donation amount (SD) multiplied by the basic rate of income tax (R) divided by 100, minus R divided by 5.
• Limits: A maximum donations limit is set at 10 times the gift aid donations amount or £5,000, whichever is lower.
• Overpayments: If a charity receives a top-up payment it is not entitled to, it must be repaid to HMRC.
• Administration: HMRC is responsible for managing the scheme and can create regulations for administration, claims, and enforcement.

Government Spending

The bill will increase government spending as it involves making top-up payments to eligible charities. The exact cost is not specified in the bill itself, and will depend on the number and amounts of qualifying donations made.

Groups Affected

• Eligible Charities: Will potentially receive additional funding through the top-up payments, boosting their resources.
• Individuals making small donations: May be indirectly impacted positively with more charities potentially able to support causes they care about.
• HMRC: Will be responsible for administering the scheme, requiring additional resources.
• Connected charities: Top-up payment will be shared amongst connected charities.
• Charities running activities in community buildings: Will have different top-up payment calculations based on their activities.

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