Commentary on provisions of Bill
Clause 1: Meaning of "eligible charity"
29 This clause amends the meaning of "eligible charity" within the Small Charitable Donations Act 2012 ("the 2012 Act").
30 Subsection (2) amends section 2 of the 2012 Act to remove the requirement that:
● a charity or CASC must have made a successful Gift Aid exemption claim in at least two out of the previous four tax years, and there must not have been a period between claims of two or more consecutive tax years, and
● the charity or CASC must have been in existence for at least two complete tax years before the tax year of the claim.
31 Subsection (3) removes sections 12 and 13 of the 2012 Act. Sections 12 and 13 provide that a charity or CASC created to take over the activities of one or more predecessor charities or CASCs can benefit from its predecessors’ Gift Aid compliance history. These provisions will no longer be required following the changes made by subsection (2).
32 Subsection (4) removes section 14(5) of the 2012 Act, which limits the Treasury’s regulation making powers in relation to amending the meaning of "eligible charity". This provision is no longer necessary following the changes made by subsection (2).
33 Subsection (5) omits regulations 17 to 19 of the Small Charitable Donations Regulations 2013 (SI 2013/938). These regulations apply to applications under sections 12 and 13 of the 2012 Act, which are repealed by subsection (3).
Clause 2: Meaning of "small donation"
34 Clause 2 makes changes to the meaning of "small donation" in the Schedule to the 2012 Act. The Schedule sets out the conditions that must be met in order for a donation to be a small donation on which a top-up payment may be claimed.
35 Subsection (2) amends the definition of "small donation" to bring contactless donations within scope of the Gift Aid Small Donations Scheme. A small donation must be a cash donation or made by a contactless payment and it must be £20 or less.
36 Subsection (2)(d) defines "contactless payment" as "a payment made at a contactless payment terminal using the contactless payment facility of a card, mobile telephone or other device". This definition includes contactless donations made using Apple Pay, Android Pay or similar services but does not extend to donations made via SMS or other mobile donation services. The definition also excludes credit or debit card donations made online, over the phone, or using the chip and PIN payment facility.
37 Subsection (3) amends paragraph 2 of the Schedule to the 2012 Act to provide that the donation must be made in the United Kingdom. This maintains the current treatment for cash donations and ensures that any contactless terminal used to collect charitable donations from donors must be in the UK at the time the donation is made.
38 Subsection (4) amends paragraph 3 of the Schedule to the 2012 Act to specify that the requirement to deposit eligible donations in a UK bank account only applies to cash donations.
Clause 3: Charities running charitable activities in community buildings
39 This section makes amendments to sections 6, 7 and 8 of the 2012 Act.
40 Subsections (2) and (3) make changes to the heading of section 6 and subsection (1) of that section to clarify that the scheme rules contained in section 6 apply to charities with more than one community building.
41 Subsection (4) omits subsections (2) and (3) of section 6 of the 2012 Act and inserts new subsections (2) to (3D).
42 New subsection (2) of section 6 provides that the specified amount (the maximum amount of small donations that a charity may claim a top -up payment on in a tax year) for a charity with more than one community building is the greater of £8,000 or the total of the community buildings amounts for each community building.
43 A charity with more than one community building may therefore be able to claim top-up payments in respect of small donations of more than £8,000 in a tax year. If a charity makes a claim for a top-up payment in respect of up to £8,000 only, the small donations can be collected anywhere. If the charity with more than one community building wishes to claim in respect of more than £8,000 small donations, the donations must all qualify as part of a community building amount in accordance with section 6 of the 2012 Act as amended by clause 3.
44 New subsection (3) of section 6 of the 2012 Act explains that the community building amount in relation to a community building for a tax year is the total sum of the small donations made to the charity in that tax year in the local authority area in which the community building is situated. The donations must be made in person. The community building amount in relation to a community building cannot exceed £8,000.
45 New subsection (3A) of section 6 of the 2012 Act provides that a small donation cannot form part of the community building amount for more than one community building. A charity may have two or more community buildings in a local authority area and a small donation can only be counted towards the community building amount for one of them.
46 New subsection (3B) of section 6 of the 2012 Act provides that where a small donation could be included in the community building amount for more than one community building the charity may choose which one it forms part of. However, where a donation is actually made inside a community building, it can only count towards the community building amount for that particular building.
47 New subsections (3C) and (3D) of section 6 of the 2012 Act defines "local authority area" for the purposes of the Bill and is self-explanatory.
48 Subsection (5) repeals subsections (4) to (6) of section 6 of the 2012 Act which are no longer relevant in calculating the specified amount in respect of which a charity may claim.
49 Subsection (6) amends section 7 subsection (1) of the 2012 Act as small donations no longer have to be made while a charity is running charitable activities in a community building in order to qualify as part of the community building amount.
50 Subsection (7) amends section 8 of the 2012 Act which defines a 'community building' in order to reflect that small donations forming part of a community building amount no longer have to be made while a charity is carrying on charitable activities in a community building. Subsections (3) and new subsection (3A) provide that where a part of a building is used, wholly or mainly, for commercial purposes (other than the sale or supply of goods) that part cannot be a community building unless a charity carries out charitable activities in that part and when it does so the charity has exclusive use of that part.
51 Subsection (8) provides a consequential amendment to section 14 of the 2012 Act (power to alter specified amount etc) as a result of amendments made to section 6 of the 2012 Act.
Clause 4: Connected charities running charitable activities in community buildings
52 Clause 4 amends the rules for determining the specified amount for a charity that is connected with one or more charities in a tax year, and where at least one of the connected charities runs charitable activities in community buildings.
53 They apply only where one or more of the connected charities runs charitable activities in a community building. If none of the connected charities runs charitable activities in a community building then the specified amount for the group is calculated in accordance with section 4 (connected charities) of the 2012 Act.
54 Subsection (2) amends section 4(4) to make it clear that section 4 will not apply if section 9 applies.
55 Subsection (3) inserts new subsections (2) to (6) into section 9 of the 2012 Act and omits old sections (2) to (8).
56 New subsection (2) provides that section 9 does not apply if the conditions in the new section 9A are met.
57 New subsection (3) provides that where section 9 applies, the specified amount (the amount in respect of which the charity may claim a top-up payment) for a connected eligible charity is determined by the new subsections (4) or (6) below.
58 New subsection (4) provides that where any of the connected charities run charitable activities in a community building the specified amount is the total of the small donations made to the charity in that tax year in the local authority area in which each community building is situated. The donations must be made in person. The community building amount for a particular building cannot exceed £8,000.
59 New subsection (5) provides that the community building amount is to be calculated in accordance with section 6(3) to (3B) of the 2012 Act.
60 New subsection (6) specifies that where a connected charity does not run charitable activities in a community building in the tax year, the specified amount for that charity is nil.
61 Subsection (4) inserts new section 9A into the 2012 Act, which allows a group of connected eligible charities to opt out of section 9 for the tax year, so that section 4 of the 2012 Act applies instead. Section 4 allows the group to share one specified amount of £8,000 between each eligible connected charity.
62 New section 9A (1) provides that election under the new section 9A can only take effect when all of the connected charities gives notice to HMRC that they do not wish to claim under the community building element of the scheme but instead wishes, as a group to claim under section 4 of the 2012 Act.
63 New section 9A(3) provides that a notice under section 9A can be withdrawn at any time by any of the connected charities but may not be withdrawn once all the connected charities within the group has given notice.
64 For example, 2 eligible charities, A and B are connected in a tax year and A has a community building. Charity A gives notice before charity B. At this point the condition in section 9A (1) is not met because HMRC only has received a notice from charity A. Charity A withdraws the notice and subsequently charity B gives notice. The condition is still not met, because HMRC does not have notice from charity A (it has been withdrawn). However, if charity B had given notice before charity A decides that it wants to withdraw its notice, at that point HMRC would have had notice from both charities and the condition would have been met. At this point charity A and B would not be in a position to withdraw either of the notices.
65 New section 9A (4) provides for regulations under section 11 to be made in connection with the new section 9A notice requirement, in particular the time limit for giving a notice, about the form and contents of the notice and any accompanying information.
66 Subsection (5) provides a consequential amendment to section 14 of the 2012 Act (power to alter specified amount etc) as a result of amendments made to section 9 of the 2012 Act. .
67 Subsection (6) inserts a new regulation 3A into the Small Charitable Donations Regulations 2013. New regulation 3A(1) allows HMRC to specify the form and contents of the notice under section 9A, and any accompanying information required in connection with the notice.
68 New regulation 3A(2) allows HMRC to require the notice under section 9A to be given by each connected charity separately or by all of the connected charities jointly.
69 New regulation 3A (3) specifies the time limits for section 9A notices. The effect of this is that where no top-up claims have been submitted for the tax year by any of the connected charities in the group, the time limit for giving notice to HMRC under section 9A is two years after the end of the tax year to which the claim relates. However, where any of connected eligible charities in the group have made a top-up claim for the tax year the time limit is 12 months from the date of that first claim. There are no separate 12 month time limits for each of the connected charities.
70 Subsection (7) ensures that new regulation 3A (notices under section 9A(1) of the 2012 Act)) may be amended or revoked as if it had been inserted by regulations under section 11 of the 2012 Act.
Clause 5: Childcare payments
71 Clause 5 will make three minor, technical amendments to the Childcare Payments Act 2014.
72 Sub-clause 5(2) will amend section 5(4) of the Childcare Payments Act 2014 which provides for the amount by which entitlement periods may be varied. The standard length of an entitlement period is three months, but in certain cases this may be increased or decreased by one month. This amendment will allow the variation to be increased from one to two months. This will enable alignment of eligibility periods for additional children when parents already have another child in the scheme.
73 Sub-clauses 5(3) and 5(4) will amend sections 57 and 58 of the Childcare Payments Act 2014, which set out the process for a person to a follow when they wish to apply for a review of a decision made by HMRC, or wish to do so outside the normal time limits. The amendment will provide for regulations to be made which specify the form and manner of applications made for these purposes. This will enable these requests to be required to be made digitally, except where the person is unable to do so, which will ensure consistency with the rest of the scheme.
Clause 6: Extent
74 Detailed analysis of the extent of the Bill is set out in the "Territorial Extent" section of these notes. This clause is otherwise self-explanatory.
Clause 7: Commencement
75 This clause is self-explanatory.
Clause 8: Savings and transitional provision
76 Subsection (1) explains that, while subsection (3) of clause 1 repeals sections 12 and 13 of the 2012 Act in consequence of the amendment to the meaning of an eligible charity, these sections will continue to apply in the case of charity mergers in the tax year 2016-2017 and earlier years. The effect of this is that a charity taking over the activities of one or more charities before 2017-18 may continue to make an application under section 12 or section 13 of the 2012 Act for the purposes of establishing eligibility for top-up payments and the effect of those sections is unchanged.
77 Subsection (2) provides that where a charity has taken over the activities of more than one charity before the tax year 2017-18 and makes an application under section 13 of the 2012 Act, the relevant old charity is determined using the same test - in subsection 13(4) - that would have been used had section 13 not been omitted.
78 Subsection (3) provides definitions for the purposes of section 8 and is self-explanatory.
Clause 9: Short title
79 This clause is self-explanatory.