Charities and Charitable Giving

The Chancellor has announced new measures designed to encourage people to give more to charity.

Gift Aid Benefit Limits will enable charities who wish to do so, to thank their larger donors in a more generous way without the donations being disqualified from Gift Aid.

Info/impact note: Gift Aid Benefit Limits

For donations to charities to be eligible for Gift Aid tax relief, there are limits on the value of benefits that individuals and companies may receive as a result of making those donations. Legislation will be introduced in Finance Bill 2011 to increase the benefit limit for donations of more than £10,000.

The existing rule that the benefit must not exceed 5% of the gift will remain the same, but the overriding annual limit to the value of benefits a donor may receive will be increased from £500 to £2,500.

Info/impact note: SA Donate

The government has also introduced measures for charities that receive donations made by Self Assessment (SA) taxpayers under the SA Donate scheme; and the SA donors making those donations.

The SA Donate scheme will also be withdrawn for repayments of tax due on tax returns for 2011-12 and subsequent years, and for any repayments made in respect of earlier tax years on or after 6 April 2012.

This measure supports the government’s objectives to simplify the tax system and direct resources to encourage charitable giving to more cost effective methods.

CFDG response to Budget 2011:

CFDG are delighted to see genuine reflection on the involvement of the charity sector in delivering the country’s economic recovery. In particular CFDG welcome Government listening to calls from the sector in a joint letter instigated by CFDG outlining simplification measures for Gift Aid. CEO of CFDG, Caron Bradshaw said “a number of announcements today will impact positively on charities. Given the central role of the sector in delivering growth we are pleased to have seen measures to tackle long-standing issues such as Gift Aid simplification.”

Caron Bradshaw added “online filing will benefit all, but removing the paper trail up to £5000 worth of donations will be especially supportive for smaller charities that currently struggle to make use of Gift Aid at all. In our 2010 survey 43.2% of respondents said they did not maximise their income through this relief – this measure can only help. This also goes some way to addressing the lack of tax incentives in the Giving Green Paper.”

A rise in income tax allowance, the reduction in fuel duty and the extension in mileage rates to volunteer passengers is good news all round for charities – with funding already strained.

This year’s Budget has an emphasis on cutting red tape and making it easier for SMEs to access new
markets.  However, it is important that charities are able to utilise new provisions in the same way, particularly given that the long-term issue of the VAT burden charities face has still been left unaddressed. CFDG continue to urge Government to make this a priority.

The consultation on the merger of National Insurance and Income Tax was also addressed today by George Osborne, a move CFDG welcome. Caron Bradshaw went on to say “it is essential that the Government engage with and listen to the views of the sector during this period of consultation as it will have implications for Gift Aid.”

Given the lack of detail on the sector in last year’s Budget, CFDG are pleased to see that there are a number of specific provisions for charities outlined today.

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Budget update for NCVO members

robertlovell | | Permalink

The Budget included measures to:

•    Introduce a Gift Aid small donations scheme - From April 2013, the Government will introduce a new scheme to allow charities to claim Gift Aid on up to £5,000 of small donations without the need for Gift Aid declarations. This promises to be a significant step forward, particularly for smaller charities. 
•    Move to a new online filing system for Gift Aid claims - A first step will be the publication of intelligent online forms.  Government aims to have the online system fully operational by 2013. 
•    Change Gift Aid rules to allow an increased limit for ‘thank you’ gifts - The Gift Aid rules will be changed to ensure that the benefit limit for ‘thank you’ gifts from charities is increased from £500 to £2,500 from April and Government will publish new guidance to clarify what counts as a ‘benefit’. 
•    Reduce the rate of inheritance tax by 10% moving from 40% to 36% for estates that leave 10% or more of the estate to charity - This will be a potentially significant benefit to those charities that benefit from legacy income.
•    Increase payments to volunteer drivers - Government will increase the Approved Mileage Allowance Payments rate to 45p per mile (25p after the first 10,000 miles). Government will also extend the passenger allowance of 5p per mile, which is already available to business, to volunteers.   
•    Retaining the Community Investment Tax Relief (CITR) - NCVO has called on government to retain CITR as an important way to stimulate the growth of the social investment market and to channel much needed investment into deprived communities.
•    There will be a consultation on reduced tax to incentivise the gift of ‘pre-eminent works of art or historical objects to the nation’.
•    Government will examine ways to promote the take-up of payroll giving, which has been disappointing and has potential to increase the rates of giving. 
 

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Find out all about the political compromises, technical background and taxation wishlists that surround the chancellor's Budget statement.