A shake-up of the system of giving to charity, including a universal donor database, is needed to boost the amounts going to good causes, a report argues.
The Charity Tax Commission said a central Gift Aid declaration database, like the NHS organ donor card system, should be launched to make giving simpler and result in fewer forms to fill in.
This would provide a single, enduring declaration which people can make covering all their subsequent gifts to charities.
Charities could access the database to see whether a given donation has a Gift Aid declaration against it.
A central database could help to “future proof” Gift Aid at a time when donors are becoming more mobile and cash transactions are increasingly digital, the report argued.
Donating through Gift Aid means charities can claim an extra 25p for every £1 given.
Donors need to make a Gift Aid declaration for the charity to claim, usually by filling in a form.
It is estimated that the UK public gave around £11.4 billion to charity in 2016/17, with £1.3 billion received by charities in Gift Aid repayments.
Making admin simpler could make inroads into the £560 million of Gift Aid that goes unclaimed each year, boosting funding for charities further, the report said.
The Government should also make it mandatory for employers to offer “payroll giving” schemes where workers can donate money from their pre-tax income, the report said.
Some 5,500 employers offer such schemes and a million employees use them.
Sir Nicholas Montagu, chairman of the Charity Tax Commission and a former chair of the Inland Revenue, said: “It’s been 20 years since charity tax reliefs were last reviewed, and many of the rules were written for an analogue era.
“With people giving by text message and contactless payment, and with many donors themselves increasingly mobile, we need a system fit for the digital age if we are not to see the UK’s natural generosity held back.”
The independent Commission was established by the National Council for Voluntary Organisations in 2017 to review the impact of the tax system on charities.
A Government spokesman said: “We are committed to supporting the vital work of charities in the UK, which is why we provided the charities and their donors with over £5 billion of tax reliefs last year.
“We constantly keep tax reliefs under review but have no plans to make changes at this time.”