Sector wants more detail from government about tax relief cap1

Finance | Tania Mason | 22 Mar 2012

Voluntary sector umbrella bodies have signalled they may lobby the government to exclude charitable donations from the cap on tax reliefs announced in yesterday’s Budget.

Chancellor George Osborne announced in his speech yesterday that HMRC would be cracking down on people who “aggressively” use even legal means to avoid paying taxes, and would set a cap of £50,000 of reliefs that can be claimed, or a quarter of a person’s income, whichever is greater.

Sector leaders reacted furiously, concerned wealthy people might be deterred from giving large sums to charity if they could not claim back the tax paid.

Charities Aid Foundation demanded an urgent meeting with the Treasury to discuss the implications of the proposal, and umbrella bodies including NCVO have indicated they may lobby for charitable donations to be exempted from the cap, once they have more detail about what the cap will cover.

In a tweet, NCVO's head of policy Karl Wilding suggested that excluding donations from the cap might encourage more donations rather than fewer.

Researcher Beth Breeze from the University of Kent, tweeted yesterday:"Just heard of a donor who's decided not to put £5m into their foundation after today's Budget. Nice one George."

Meetings are expected to be held with HMRC over the next few weeks.

Directory: HM Revenue & Customs (HMRC)

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Polly Gowers
CEO and founder
Everyclick
23 Mar 2012

Overall, this generous budget positively affects individuals at both ends of the tax payable-spectrum. According to Osborn, the rationale here is to help loosen the public’s belt to ‘support charitable giving’. However, the cuts in government funding are unlikely to have a significant impact on the shortfall in subsidies that are so desperately needed by the charity sector.

The Big Society is an amazing initiative, but the charity industry cannot rely on the public, as it just is not possible for the majority to dig deep to fund the gap. Moving forward, the only feasible way to make a sizable difference to charity funding is to seamlessly target and move money from the corporate sector at no cost to the charity or general public.

Hence, I think it is now, more than ever, important charities access unrestricted and recurring funding in a simple way, without affecting charity resources or cannibalising current revenue streams. With the Internet’s incredible scale of application, charities have the potential to grow through new revenue models with many mechanisms available to support them. For example, digital technologies, such as Give as you Live, unlock the hidden millions available to charities online by providing a simple 'call to action' to their supporters.

It’s a tough time for charities at the moment and we hope that they can work with their supporters and take advantage of new fundraising initiatives.

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