Proposed legislation may impact membership charities’ ability to claim gift aid on subscriptions

The Digital Markets, Competition and Consumer Bill had its second reading in the House of Lords on 5 December, at which the following issues were raised.

The relevant provisions in the Bill intend to protect customers from experiencing difficulties when they wish to end subscriptions with auto-renewing contracts for the supply of goods, services and digital content. However, charities have raised concerns about the measures proposed and the impact that they may have on the claiming of gift aid by charities.

The Bill treats membership as a commercial transaction rather than a donation, meaning that, under the Bill, memberships or subscriptions would have to be refundable and charities could not claim gift aid on the subscription, as gift aid applies to donations, which cannot be refunded. Consequently, as drafted, Chapter 2 Part 4 of the Bill could have a financial impact on charities as well as imposing additional administrative burdens.  

Charities including the National Trust, the Zoological Society of London and the Royal Horticultural Society have called for charitable membership organisations to be included in the list of exemptions from these provisions in the Bill. A crossbench peer, Lord Etherton, raised as an example the Royal British Legion: “it has 194,000 members, 38% of whom have Gift Aid subscriptions. That gift aid represents approximately 10% of the total RBL membership fee revenue. This could have an obviously very detrimental effect”. The Charity Tax Group, amongst others, is making representations on behalf of organisations.