A city MP last night led government attempts to put in place new rules that could see the UK’s charity sector up to £100m better off each year.

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Under current ‘Gift Aid’ regulation when a person gives money to charity, the organisation can claim tax back on the individual’s donation as long as the person gives consent in writing.

But the system makes it very difficult for charities to claim money back from donations collected in tins and buckets, for example, as people who give cash in that way are unlikely to stop and fill out a form.

Now, under a Bill introduced in the Queen’s Speech and part authored by Norwich North MP Chloe Smith, charities will be able to claim top-up payments of up to £1,250 on small donations to a total of £5,000 without undergoing the bureaucracy demanded by the Gift Aid scheme.

Before leading a debate on the issue in the House of Commons last night, Ms Smith said: “This is expected to mean around £100m a year more going to charities in coming years. It helps charities large and small which rattle tins or pass collection boxes at events or in the high street.

“I believe that is a practical way government can really help, right at the heart of the community. In Norwich, as in the rest of the country, charities need a system that is on their side and helps people to give more.

“That’s been one of my priorities in the Treasury and as a local MP. Charities in Norwich do so much. Now they can do a little bit more for the causes they support, through this Bill.”

Shadow economic secretary Cathy Jamieson said she believed the plan would boost income for charities, but warned against making the new regime too complicated,

She said: “The abiding principle [charities] want to see adopted is that it should be easier to access and not be tied up in red tape.”

The legislation will now progress through to the House of Lords for scrutiny before returning to the Commons for final approval.

It is hoped that charities and voluntary groups will start to feel benefits of the scheme by 2015/16.

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