30 October 2018

Reducing admin for charities

HMRC announced several measures to reduce admin burden for charities

HMRC has listened to calls from the charity sector and announced several measures that will go some way to reduce charities’ admin burden.

The most welcome change updates the non-primary purpose trading limits, which have been static for many years. The limits enable charities to carry out a small amount of non-primary purpose trading without being subject to tax. The lower limit has now been increased from £5,000 to £8,000 where a charity’s relevant turnover is less than £32,000; the upper limit has increased from £50,000 to £80,000 where a charity’s relevant turnover is in excess of £320,000.

Many charities do undertake a small amount of non-charitable trading, so this update will save them the admin time and costs associated with running a trading subsidiary. The change takes effect from 1 April 2019 for incorporated charities and 6 April 2019 for unincorporated charities.

In a second measure, HMRC has increased the limit of the Gift Aid Small Donation Scheme (GASDS) to £30. This scheme allows charities to collect small amounts without the need for a declaration, while still being able to claim the gift aid uplift – a valuable source of income. This measure will take effect from 6 April 2019, subject to legislation.

A final announcement benefitting charitable shops is the update to the Retail Gift Aid Scheme. Current rules require relevant shops to write to donors annually, but this has been changed to once every three years where donated goods raise less than £20 per annum.

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