Small Charitable Donations and Childcare Payments Bill

Debate between Jane Ellison and James Morris

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[Jane Ellison]

My hon. Friend is right to suggest that we are seeking as much simplicity as we can get, but I will perhaps come on to and tease out during the debate why we want to ensure that that simplicity and light touch goes alongside a degree of assurance. Finding that balance is perhaps one of the areas where a range of views will be expressed. We are keen to have a degree of assurance about the claims made and the public money given to charities.

On the consultation that took place, it might help colleagues to know that John Low, the chief executive of the Charities Aid Foundation, has said:

“The inclusion of a Small Charitable Donations Bill could be good news for charities, particularly for smaller organisations which have often struggled to unlock the benefits of Gift Aid. This provides a real opportunity to simplify the scheme”—

that is the point made by my hon. Friend the Member for Rochford and Southend East (James Duddridge)—

“and make it fit for the 21st century”.

[James Morris (Halesowen and Rowley Regis) (Con)]

Small charities in my constituency include the Leasowes walled garden project, which is part of the Halesowen Abbey Trust—a small organisation dependent on small donations. What plans does the Minister have to communicate to those small charities the benefits of the scheme that she is outlining?

[Jane Ellison]

My hon. Friend might be interested to know that Her Majesty’s Revenue and Customs has a team that goes out promoting these schemes. I was really impressed to read that since 2014 it had given more than 600 presentations to charities of all sorts of sizes, up and down the country, but he is right to say that we can always do more. I really hope that as a result of the Bill and this debate, colleagues will feel that they, too, can play an important role in telling charities in their area the good news that the scheme just got easier. Obviously, we all have a lot of contact with smaller charities in particular, and we get to know them over the years in which we represent them.

The changes are the result of months of consultation and constructive discussion with the charity sector. I thank the hundreds of charities, representative bodies and other organisations that worked with HMRC to make this review work.

Let me turn to the first of our proposed changes. The Bill will make an important change to the criteria for eligibility for the gift aid small donations scheme. Currently, to be eligible, a charity must have been registered for at least two full tax years, and have claimed gift aid in at least two of the previous four tax years, without a gap of longer than a year; obviously, that is around the assurance process. The Bill removes both those criteria, allowing newer and smaller charities to access the scheme sooner. As we all know, for a charity, those early years are important. The change will provide a welcome financial boost when it is most needed. This is a substantial simplification of the scheme; the only remaining eligibility criterion that charities and community amateur sports clubs will need to meet is the gift aid matching requirement, under which charities must claim £1 of full gift aid for every £10 claimed under the small donations scheme.

There are two reasons why we feel it is necessary to retain this rule. The first is to incentivise charities to engage with the full gift aid scheme, which will provide them with even greater income over the longer term. The second is to protect from fraud the small donations scheme, which has substantially fewer record-keeping requirements than gift aid—an important factor that was looked at when the scheme was first designed back in 2012. It is by retaining the rule that donations under the scheme must be matched with gift aid donations that we can best do that. We are simplifying the rules on eligibility as far as possible to allow as many charities as we can to benefit, while protecting the integrity of the scheme.