Small Charitable Donations and Childcare Payments Bill

James Duddridge Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 15th November 2016 Commons Chamber

The Government completely agree that the process for claiming gift aid on SMS and online donations made through digital intermediaries should be simpler. We have discussed this issue in detail with the sector and have published several consultation documents. Indeed, my hon. Friend the Member for Amber Valley (Nigel Mills) made reference to one such document in Committee, and it has been referred to again today. I am pleased to tell him, the shadow Minister and other hon. Members that we have made progress on this issue. Primary legislation was included in the Finance Act 2015 and the Finance Act 2016, and draft regulations were published for technical consultation earlier this year. The Government intend to lay those regulations shortly, and they will simplify the process of gift aiding donations through digital intermediaries. Instead of completing a gift aid declaration for every donation made, donors will be able to sign a one-off authorisation allowing the intermediary to create gift aid declarations and claim gift aid on the donor’s behalf for all subsequent donations made in that tax year.

[James Duddridge (Rochford and Southend East) (Con)]

I was about to rise to congratulate the Minister, as this seems like a really good initiative, but why apply this for only just that tax year? Given that someone is able to donate to an organisation and do it within a tax year, why not roll this over into future tax years to extend this provision? Perhaps I am being uncharitable to her, as this is a good provision, but it could be even better.

[Jane Ellison]

I strongly suspect that there are technical reasons why that would be difficult, but I am happy to take my hon. Friend’s suggestion away, look at it and respond properly to him. In the spirit of simplification, he seeks to make it ever easier to make these donations. As a result of the way Her Majesty’s Revenue and Customs operates—within tax years—I could foresee difficulties with this approach, but I will look at it and write to him with a bit more detail.

There are more things we can do to make things easier for charities, and the Government are constantly looking at ways of achieving that—we have just heard another suggestion from my hon. Friend. I am pleased to tell the House that we have a very good track record of simplifying gift aid processes for charities. For example, in 2013 we introduced Charities Online to help charities to claim gift aid even faster, and 95% of charities now use this service. Instead of having to fill in paper forms and post them back to HMRC, charities can claim their repayments online and have them paid directly into their bank account. Under the old paper system it could take up to three working weeks for charities to receive their repayments, whereas most claims are now paid within five working days. I am sure hon. Members would agree that that is a welcome boost for charities. Just last year, HMRC introduced a new, shorter model gift aid declaration to make it easier for donors to understand their obligations under the scheme, and it worked in close collaboration with the Charity Retail Association to simplify and clarify the Government’s guidance on the retail gift aid scheme. Earlier this summer, the Treasury published a consultation exploring ways of simplifying the gift aid donor benefits rules, and we looked carefully at the responses received before publishing a response.

Of course, we will keep looking for ways to simplify and improve gift aid, but these are questions about the wider gift aid scheme, not the gift aid small donations scheme. My hon. Friend might be pleased to note that one reason I foresaw difficulties with his proposal is that people’s tax status can change from year to year—for example, when they move from work into retirement—and this would make things difficult. I hope that that response is helpful, but I will follow up with him in more detail.

Amendment 2 would grant the Treasury the power to amend the Small Charitable Donations Act 2012 in the future in the event that new donation technology develops. Members who were present at the original Bill discussion reminded us in Committee that they had made points about future-proofing the scheme in terms of technology at that time. My hon. Friend the Member for Amber Valley and the hon. Member for Clwyd South (Susan Elan Jones) are nodding. It is an interesting point, which we have debated.

The Government have consulted fully on the changes to the scheme, and as part of the consultation that we have just undertaken, the extensive nature of which I outlined earlier, HMRC officials went out and met charities and other groups to discuss contactless donations and other technological developments. They considered methods of donation that are not currently in use but might be in the pipeline. I understand that there was no suggestion from the stakeholders that there are other imminent technological developments in the pipeline that would be suitable for the small donations scheme. In any event, we have deliberately drafted the definition of “contactless payment” quite widely.

As I explained to my hon. Friend the Member for Amber Valley in Committee, the definition in the Bill would cover donations from, for example, Oyster cards, as the shadow Minister mentioned, or other smart cards. It would also cover new payment services similar to Apple Pay and Android Pay. We believe that the definition in the Bill is sufficient to cover most of the technological developments that we are likely to see in the reasonably foreseeable future.

[James Duddridge]

My hon. Friend will not be surprised that I expressed some degree of sympathy with amendment 2, given that I raised some of these points. I am reassured about the extension of contactless payments, particularly to Oyster cards, as was mentioned from the Opposition Front Bench. However, I do not support the amendment because of its wording. It refers to “comparable method”. The shadow Minister used the word “similar”, and my hon. Friend the Minister used the term “unspecified”. That is all unclear. There will be further technological changes and we will probably look back and say, “Wasn’t there a formulation that we could have used to include this new technology?” The wording of the amendment is not satisfactory and unfortunately I cannot offer a suggestion to improve it.