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Sector 'needs a plan B on tax relief cap'3

Fundraising | Celina Ribeiro | 12 Apr 2012

The voluntary sector needs to be mindful of the “political reality” of the tax relief cap and come up with an alternative plan that is palatable to both the government and the sector, charity tax expert Richard Bray said last night.

Bray, who is technical director at Cancer Research UK and co-chair of the technical subgroup at Charity Tax Group, was addressing an Institute of Fundraising Special Interest Group seminar on the issue of the tax relief cap.  

Emphasising that he was airing his own personal views, Bray told the audience that “the voices in the charity sector are not necessarily helping” and that “we need to be mindful of the political reality”.

Because the government has lowered the highest tax rate from 50p to 45p, it needs to be seen by the electorate to balance this with a policy that targets the wealthiest citizens.  It is “naïve” of the sector not to see this, Bray said.

Let’s get a plan B

While civil servants in the Cabinet Office and DCMS were “almost as horrified as we were” about the cap, Bray said it was clear that the Treasury is committed to the proposal.  For this reason, while the sector is right to persist with the GiveitbackGeorge campaign, it would also be wise to propose a plan B that is acceptable to both sides.  

He did not expand on with this alternative might comprise.

“When you’re dealing with government, being right doesn’t mean you get your way,” he said.

He also advised the sector to make sure it is consistent with its own messaging. “We say tax relief doesn’t matter [in motivating major gifts], but we’re up in arms.  We need to get our ducks in a row.”

Alternative Minimum Tax model

Kevin Russell, vice chair of CTG and technical director at Stewardship, has floated one alternative idea. He told civilsociety.co.uk: “If the government is so taken by a policy that all should pay tax, and are citing the USA as a model to follow, why do they not drop the charity cap proposal and instead look at an Alternative Minimum Tax model, also used in the US?

“That way, charity donations are not attacked directly, the structure is simpler and clearer, and philanthropists and donors are not given an unhelpful message that says giving is great but we don’t want you to go too far in your public spirited generosity.”

Such a model was also suggested by Richard Piper, chief executive of Roald Dahl’s Marvellous Children’s Charity, in a comment on a story on civilsociety.co.uk earlier this month.  He wrote:  “If the objective is to ensure wealthy people pay some tax, then why not introduce a minimum tax contribution before reliefs apply, rather than capping the tax relief. Would that work?”

Additional reporting by Tania Mason

Directory: Cancer Research UK | Charity Tax Group | Stewardship | Stewardship Services
Who's Who: Kevin Russell | Richard Piper | Richard Bray