Under the Gift Aid scheme the UK government effectively supplements a charitable donation by adding basic rate tax to the amount donated. The scheme is very valuable for UK charities as the government has added more than GBP 5 billion to charitable contributions since 2010/11.

As the government is committed to enabling the use of digital platforms for charitable giving it has been working to identify barriers to giving. To make it easier for donors to use digital platforms to make multiple donations to different charities the UK government is introducing the concept of the donor intermediary.

Currently each time a donor makes a gift aid donation a Gift Aid Declaration (GAD) must be completed. This is required even if donations to a number of different charities can be made through the same giving platform. Declarations in respect of each donation need to be given to the intermediary platform.

One problem that arises is that where for example a donor makes a donation through an SMS message the charity must then reply asking for the name, address and confirmation that the person is a taxpayer. The donor may not always reply to this and the charity may prefer just to message thanks for the donation. The charity therefore cannot claim back the basic rate tax on that donation.

A new voluntary process is therefore being introduced to ensure that a donor will only need to complete one Gift Aid Declaration each year for each intermediary. The donor would therefore be able to give to a number of different charities through the same intermediary while only completing one declaration once a year.

Under this system when a donor intermediary first receives a donation it can ask the donor for authorizations to complete declarations on the donor’s behalf for the rest of the tax year. If the donor agrees the intermediary can then automatically create the further declarations for other donations made by the same person in the tax year. The donor could withdraw from this arrangement at any time.

It should be noted that the donor is responsible for making up the shortfall if insufficient tax has been paid to cover the donations. The donor is also responsible for informing the intermediary if the donor’s circumstances change, for example the donor no longer pays UK tax or is not eligible for Gift Aid.

The donor intermediary would produce an annual statement of donations made by the donor during the tax year, to be sent to the donor by 31 May following the tax year. This would show the total amount of donations made in the tax year, the maximum amount of Gift Aid that could be claimed on the donations and a reminder that if the donor has paid insufficient tax in the year to cover the donations the donor is responsible for making up the difference. The intermediary would explain that donations made directly to charities or through other intermediaries are not shown on the statement.

The consultation paper requests input on whether the new rules would achieve the required outcome or if there are any unintended consequences. Comments are invited from interested parties by 5 October 2016.