The Digital Markets, Competition, and Consumers Act – Is Gift Aid under threat?

The Digital Markets, Competition, and Consumers Act, which comes into force in 2026, seeks to expand consumer protections and give the Competition and Markets Authority (CMA) more power to enforce the law directly.

Under the new act, the CMA will have increased power to order compensation payments to consumers, without needing to go through the courts.

The CMA will also have the power to determine consumer law breaches and impose fines of up to £300,000 or 10% of global turnover (whichever is higher). Additionally, the Secretary of State will be given additional power to develop a list of blacklisted practices, allowing the law to develop and evolve in response to market changes.

Why is the act important for arts and culture?

The act is relevant to charities because of the changes it will bring to the laws surrounding subscriptions.

According to current government estimates, consumers are losing £1.6 billion each year due to issues surrounding subscription contracts. To mitigate this, the act proposes introducing legislation that makes provision for the refund of subscription payments during a statutory cooling-off period.

This measure would mean that consumers would be entitled to their money back if they decided to withdraw from a subscription within a pre-determined time window. The measure is designed to give better protection to the consumer and allows them to recoup money if they enter a subscription accidentally, or subsequently decide against it.

However, arts, cultural and heritage organisations are concerned about this measure. By introducing the possibility of a refund, charities fear the legislation would contravene the conditions of Gift Aid, which stipulate a gift cannot be “subject to a condition as to repayment”.

This would potentially leave charities unable to claim Gift Aid on membership subscriptions, something which could pose significant fundraising, income generation and business model issues for arts and cultural organisations.

What is being done to tackle this?

Considerable effort is being made to ensure that this situation does not materialise. Over the course of the last year, a number of sector support organisations have voiced concerns about the act, including NCVO and Civil Society.

The issue was also posed to Kevin Hollinrake, Parliamentary Under Secretary of State (Department for Business and Trade) in the House of Commons in December 2023. At the time, Hollinrake stated:

“The Government understands the importance of Gift Aid to charities and officials are engaging with relevant stakeholders and HM Revenue and Customs to ensure the two regulatory frameworks work effectively”.

More recently, a presentation by Charities Finance Group’s head of policy, Richard Sagar, at the Healthcare Financial Management Association conference confirmed that:

“Government intends to amend gift aid legislation by statutory instrument so that charities can continue to claim gift aid while complying with the new protections for consumers under the bill”.

Sagar went on to say a consultation on how to achieve this will take place before the end of 2025.

Keeping the pressure up

Whilst it seems likely the act will be amended to safeguard Gift Aid, it is important that the sector continues to call for swift progress on this issue. Organisations draw large amounts of income from memberships and subscription, with almost 40% (£48million) coming from this source in the case of the English Heritage Trust. A loss of Gift Aid from subscriptions would be a heavy blow for the sector and one that must be avoided, especially given the current challenging economic climate.

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