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“Big Society” gets charity tax boost

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25th Mar 2011
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George Osborne allocated a large part of his Budget speech to new measures designed to encourage people to give more to charity.

As part of the “Big Society” vision the government has set its sights on addressing long-standing issues such as Gift Aid simplification and the role of the charity sector in delivering growth.

Osborne said on Wednesday: “Together, these [measures] represent the most radical and most generous reforms to charitable giving for more than twenty years.”

The Charity Finance Directors' Group (CFDG) was quick to welcome the new government measures - calling them a “genuine reflection on the involvement of the charity sector in delivering the country’s economic recovery”.

In particular, the Gift Aid small donations scheme promises to be a significant step forward for smaller charities.

Reducing the rate of inheritance tax will also be a potentially significant benefit to those charities that benefit from legacy income.

Some of the key charity-related Budget measures include:

  • 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
  • new online filing system for Gift Aid claims - first step will be the publication of intelligent online forms. Scheduled to be fully operational by 2013
  • change Gift Aid rules to allow an increased limit for ‘thank you’ gifts - the benefit limit is increased from £500 to £2,500 from April. Government will publish new guidance to clarify what counts as a ‘benefit’. Info/impact note: Gift Aid Benefit Limits
  • 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
  • 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). Extension of the passenger allowance of 5p per mile to volunteers
  • retaining the Community Investment Tax Relief (CITR)
  • 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
  • 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. Info/impact note: SA Donate

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

The Budget also included the following repeals:

Further reading:

AccountingWEB Budget discussion group
HMRC (charities): Main announcements that will affect HMRC customers

Replies (1)

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By Robert Lovell
19th Apr 2011 16:23

New Charities discussion group

If you are affected by similar charitable issues - or just want to share tips and ideas with other users - come and join us at AccountingWEB's new Charities discussion group.

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