EXPLANATORY NOTE

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2. Subsection (1) provides for subsections (3), (6) and (7) of Section 48, Finance Act 1998 to cease to have effect. That removes the reference to the minimum Gift Aid payment in Section 25(2)(g), Finance Act 1990, repealed by Clause 38 and the description of an appropriate certificate for MGA.

3. Subsection (2) amends subsection (4) of Section 48. In paragraph (a) the words, "before 6th April 2000" are inserted after "made". A new paragraph (bb) is inserted after paragraph (b). In paragraph (c) the words "appropriate declaration" are substituted for the words "appropriate certificate". These changes apply the improved Gift Aid changes, while retaining the residual advantages of MGA.

3. Subsection (3) substitutes a new definition of "relevant gift" in subsection (8) of Section 48. That definition allows a gift to qualify without meeting the rules in new subsection 25(2)(e) relating to donor benefits.

4. MGA is a special, modified form of Gift Aid that applies to gifts by individuals to certain charitable causes made in the period 31 July 1998 - 31 December 2000. The main advantages of MGA are:

• the minimum limit in Section 25(2)(g) FA 1990 is reduced from £250 to £100

• gifts of less than £100 can qualify for relief by being aggregated with subsequent gifts made in the period, provided the aggregated gift satisfies the £100 reduced minimum limit test in Section 25(2)(g).

5. Following the abolition of the £250 minimum limit for Gift Aid donations from 6 April 2000, the £100 reduced minimum limit is no longer advantageous for gifts made on or after that date. However, MGA still offers two residual advantages where gifts made before 6 April 2000 are aggregated with gifts made on or after that date:

• gifts of less than £100 made before 6 April 2000 can qualify for relief, provided the aggregated gift satisfies the £100 reduced minimum limit test in Section 25(2)(g)

• the charity can reclaim tax on the aggregated gift at 23% (the basic rate in force at the time of the first of the gifts) notwithstanding that some of the gifts will have been made when the basic rate is 22%.