What is the Gift Aid Small Donations Scheme under section 1 of the Small Charitable Donations Act 2012?

The Gift Aid Small Donations Scheme allows eligible charities to claim a top-up payment from HMRC on small donations without needing individual Gift Aid declarations from donors. To qualify, the charity must be eligible, have made at least one successful Gift Aid claim in the tax year, have received small donations, and submit a claim to HMRC.

How is the top-up payment calculated under the Small Charitable Donations Act 2012?

The top-up payment is calculated using the formula SD × R ÷ (100 − R), where SD is the total qualifying small donations and R is the basic rate of income tax. This mirrors Gift Aid by treating each donation as a net gift from which basic rate tax was deducted. At a 20% basic rate, the top-up is 25p per £1 donated.

What is the maximum amount of small donations a charity can claim top-up payments on?

The maximum donations limit is the lower of £8,000 or ten times the charity's Gift Aid donations for that tax year. This means a charity needs at least £800 in Gift Aid donations to claim on the full £8,000 cap. The ten-times rule ensures charities maintain an active relationship with Gift Aid.

How do connected charities and community buildings affect entitlement under section 1?

Additional rules apply to connected charities and those running charitable activities in community buildings. These rules may adjust how the maximum donations cap is shared or allocated between connected charities, and may provide additional allowances where charitable activities are carried out in qualifying community buildings.

Small Charitable Donations Act 2012 section 1

Top-up payments in respect of small donations made to eligible charities

Section 1 establishes the entitlement of eligible charities to receive top-up payments from HMRC in respect of small charitable donations, and sets out how those payments are calculated and capped.

An eligible charity that has made a successful Gift Aid claim in a tax year can claim a top-up payment from HMRC on small donations received in that year.
The top-up payment is calculated using the formula SD × R ÷ (100 − R), where SD is the qualifying small donations and R is the basic rate of income tax — effectively grossing up the donation as if Gift Aid applied.
The maximum amount of small donations on which a charity can claim top-up payments is capped at the lower of £8,000 or ten times the charity's Gift Aid donations for that tax year.
Special rules apply for connected charities and charities running charitable activities in community buildings, which may affect entitlement.

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