What is the banking requirement for cash donations under the Small Charitable Donations Act 2012?

Schedule paragraph 3 requires that cash donations claimed under the small charitable donations scheme must be deposited into a bank account held by or on behalf of the charity. The deposit must be made at a relevant institution within the United Kingdom to qualify for a top-up payment.

What is a 'relevant institution' for the purposes of depositing charitable cash donations?

A relevant institution takes its meaning from section 109(3) of the Charities Act 2011. It broadly covers banks, building societies, and other regulated financial institutions recognised under that Act. This ensures cash is banked through legitimate channels, providing an audit trail and reducing the risk of fraud.

Why must charities bank cash donations rather than spend them directly?

The banking requirement serves as a safeguard to demonstrate that donations were genuinely received and properly accounted for. Since small cash donations lack the documentation associated with Gift Aid claims, depositing cash into a recognised UK bank account provides the necessary audit trail for HMRC verification purposes.

Can a charity deposit small cash donations into an overseas bank account and still claim a top-up payment?

No. The deposit must be made within the United Kingdom at a relevant institution. If a charity deposits cash donations into an overseas account or spends the cash directly without banking it in the UK, it will not meet the conditions required to claim a top-up payment under the small charitable donations scheme.

Small Charitable Donations Act 2012 section Schedule paragraph 3

Banking requirement for cash donations

Schedule paragraph 3 sets out the requirement that cash donations must be deposited in a UK bank account held by or on behalf of the charity in order to qualify under the small charitable donations scheme.

Cash gifts claimed under the scheme must be deposited into a bank account kept by or on behalf of the charity
The deposit must be made at a "relevant institution" as defined in the Charities Act 2011
The deposit must be made within the United Kingdom
A "relevant institution" broadly means a bank, building society, or similar financial institution recognised under the Charities Act 2011

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