HMRC publishes costs to Exchequer of gift aid relief

David Gauke, MP for the Vale of Clwyd

HMRC publishes costs to Exchequer of gift aid relief 4

Finance | Tania Mason | 1 May 2012

HMRC has published figures showing that it made gift aid payment to charities totalling £1.075bn last year, and paid an additional £360m back to higher-rate taxpayers in tax relief on charitable donations.

The data provides the first real evidence of the cost to the Exchequer of gift aid tax reliefs.  The Treasury insists that the proposed tax relief cap is not motivated by a wish to reduce the cost of the scheme, but rather by a determination to prevent people from slashing their tax bills by claiming unlimited reliefs. However, Economic Secretary to the Treasury Chloe Smith admitted last week that the proposed cap was also aimed at tackling the national deficit.

The figures were compiled by Howard Turner from HMRC’s personal taxes division and cited by Exchequer Secretary David Gauke (pictured) in response to a parliamentary question by Labour MP Chris Ruane.

The MP for the Vale of Clwyd asked how much, in current prices, was claimed in tax relief on giving in each of the last ten years; and how much the government expects to be claimed in each of the next three years.

Gauke said that forecasts until 2015 were not available, but pointed Ruane to a table on the HMRC website containing relevant figures dating back to 1990.

The data shows that since gift aid replaced covenants (the previous tool used for claiming tax relief on donations) in 2000, basic-rate tax repayments made to charities has grown almost 60 per cent, from £649m to an estimated £1.075bn in the year to April 2012.  And higher-rate relief returned to taxpayers has ballooned by 260 per cent over the same period, from £140m in 2000/01 to around £360m in 2011/12 – though figures for the two most recent years are provisional.

Figures on a subsequent table also show that in 2010/11, the latest year for which data is available, individuals made donations to charity totalling £4.91bn through the gift aid system – a rise from £1.84bn in 2000/01. Once their tax relief was returned to them, the net amount they donated fell to £3.83bn.

This data demonstrates that the cost of the gift aid system to the Exchequer has been growing steadily year on year, and shows no signs of levelling off on its own.  By capping the tax reliefs available as proposed and thereby incentivising higher-rate donors to give less, HMRC will not only have to pay out less in higher-rate tax relief to the donor, but also less in basic-rate repayments to the charities.

Treasury: Committed to fairness

A Treasury spokeswoman added: “There are currently millionaires paying a lower tax rate than ordinary taxpayers.  This is the system we have at the moment, but the government is committed to making it fairer.

"The Budget makes clear that we want to ensure genuine charities that rely on large donations are not hit significantly, which is why we said we’d spend time working with the charity sector and philanthropists on the details.”


Sir Robin Bogg
1 May 2012

No doubt the government will also publish figures showing how much the State is saved by charities taking on all the things they do.1361 ptabonu

Adrian Beney
More Partnership
1 May 2012

You can't use any of this data to justify the assertions you make in this article.

All the data tells us is how much money was given under Gift Aid, and how much was given under payroll giving etc, and how much relief individuals received. If, for each donor, none of this represented more than a quarter of their income (or £50,000 if greater) then the cap would have no effect whatsoever on these numbers.

What the Treasury still has not produced is any numbers on the amount of charitable giving which exceeds the proposed cap. They have produced data which tells us about a very very small number of people who are using the reliefs system to reduce their tax liability very substantially. But is only when the Treasury separates out the charitable component of that data that we will have any decent information with which to understand how much money the Treasury hopes to raise in implementing this cap.

Finally - is this really a problem? Surely it's cause for celebration. Every extra £25 claimed from HMRC represents an extra £100 given to charity. Hooray!

Charles Williams
1 May 2012
Response to [Adrian Beney]

I hope that the Treasury will now publish the amount of gift aid paid to each charity where the total in 2010-11 exceeded £10,000. Then we can all see where the money goes.

Kevin Russell
Technical Director
1 May 2012
Response to [Charles Williams]

Charles, I think that if HMRC did this (and I strongly suspect that they will not on grounds of confidentiality), you may be surprised. Many large donors give to donor advised funds (such as Stewardship, CAF and so on), to local Community Foundations and to (bona fide, genuine) personal charitable trusts.

From there, grants are made to a myriad of local and small charities undertaking fantastic community work, achieving a great deal of social and public benefit, and aided and abetted by an army of local volunteers, at no cost to the public purse.

Maybe, we would be better asking HMRC to reinstate and extend their Higher Rate taxpayer Gift Aid statistics - which have not been published since 2003-04.


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