Tax proposal threatens administrative nightmare for volunteer-heavy charities

Finance | Tania Mason | 7 Mar 2011

The spectre of an “administrative nightmare” for the sector that has already been seen off once by Charity Tax Group has resurfaced in a new report from the Office of Tax Simplification (OTS).

The OTS’ final report, published last week, contains a proposal to simplify many minor employee tax benefits with a de minimis limit of £100/£500, and to amend the current £8,500 threshold below which benefits in-kind and expenses payments are not taxable.

“This is potentially of considerable concern,” said CTG director Helen Donoghue. “The previous government consulted on the idea of abolishing the £8,500 threshold for the taxation of employee benefits under the banner of ‘better regulation for business’.

“Unfortunately, however desirable that proposal may have been for businesses, it would have been an administrative nightmare for charities with lots of regular volunteers and we communicated this to HMRC at the time and pointed out that at least one of our members had over 50,000 volunteers that would need to be covered.”

Three years ago the Labour government agreed to drop the idea following lobbying from CTG but Donoghue said the group was ready to make the case again if the idea is resurfacing.

Other OTS recommendations of relevance to charities are the retention of gift aid, of tax reliefs on gifts to charity of qualifying investment and gifts of trading stock, and VAT supplies to or sales by charities. “It is important to note the commitment to the protection of zero rates,” Donoghue added.

Directory: Charity Tax Group | HM Revenue & Customs (HMRC)
Who's Who: Helen Donoghue

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