Tax relief cap will cost sector £1bn, says Community Foundation Network5

Fundraising | Tania Mason | 13 Apr 2012

The Community Foundation Network has produced figures suggesting that the tax relief cap will cost charities £1bn while only producing additional tax receipts for the government of £200m.

In a letter to the Evening Standard yesterday, CFN’s chair Matthew Bowcock wrote: “We estimate that if you add together those who would have given and others discouraged from becoming donors, the charitable sector would be £1bn worse off while HMRC would gain only £200m.

“You have to ask what’s better for Britain,” he stated.

Bowcock also estimated that the 57 community foundations that fund small local charities and voluntary groups across the UK stand to lose around 20 per cent of their donations if the measure goes through.

More charities and MPs condemn proposal

Meanwhile, voices as diverse as Business Secretary Vince Cable, Tory MP David Davis, Oxford and Cambridge universities and Macmillan Cancer Support have all waded in to the row today.

Macmillan has warned that the proposed limits would affect its fundraising efforts for its new cancer centre, while the two universities have each written privately to ministers to express their concerns about the likely impact of the cap on alumni fundraising.

A spokeswoman for Cable said that he had been lobbied by universities about the proposal and would be taking their concerns to the Treasury. And David Davis told The Guardian: “If the government’s aim is to prevent tax avoidance, it would be better to ensure donations are approved by the Charity Commission. Or if the charity is based abroad, it should be subject to review by [HMRC]. If the government’s aim is simply to raise money from philanthropists, the government should say so.”

Arts Council England said the measure put at risk more than £80m in regular donations to its funded organisations.

Messages out of the government continued to confuse. A spokesman from Charity Tax Group said the government “seems to yoyo every day about which way it will go”.

John Low, CEO of Charities Aid Foundation, added: “Ultimately, it will not be the rich who will lose out. It will be the most vulnerable people in society, and the other causes charities support.

“The time has come for George Osborne to listen to the many voices inside government and among charities and donors, who are saying clearly that he should now think again.”

Directory: Charities Aid Foundation | Community Foundation Network
Who's Who: John Low | Matthew Bowcock

Place a comment

Nick Brooks
Head of not for profit
Kingston Smith
13 Apr 2012

Whereas like most people involved very closely in the charity sector I am concerned with the 'proposed' cap on tax relief, however I am more concerned that if the sector shouts about unsubstatiated figures of lost income it will do more harm than good. Of course we must make our representations but if I was a government minister I would want some hard evidence of the figures and find it difficult to know how any of the sums being talked about have been calaculated. To a mere humble accountant it seems impossible, based on a reasonably good understanding of what the legislation says, to come anyway near calcultaing a total number. Please let me see the figure to dispel my scepitism!

[Reply]

Carl Allen
13 Apr 2012
Response to [Nick Brooks]

Like the paranoia with the charity Icelandic investments, will we see the same paranoia from the affected part of the sector when the consultation on the matter starts

[Reply]

Gary Wiltshire
13 Apr 2012

There are so many figures doing the rounds, and plucking sums out of the air does nothing to underpin the strength of any case that the charitable sector has in this argument. How on earth has Matthew Bocock arrived at £1bn?

There's an essential dilemma here: You cannot argue for more state funding, for the rich to pay higher taxes to cover it, and not to restrict the access they have to tax allowances that erode what goes to the state. Let wealthy people make all the donations they want, but let them do it from their post tax earnings. At least the state is somewhat democratically accountable for how it spends its money. Wealthy donors are not.

This whole debate is not about donations, it is about the role of Gift Aid in multiplying the value of them, and the role the state plays in defining the scope of Gift Aid.

[Reply]

Carl Allen
13 Apr 2012
Response to [Gary Wiltshire]

Give to Caesar what is Caesar,s and give to charity what you can.

[Reply]

Jon Codd
13 Apr 2012
Response to [Gary Wiltshire]

I don't normally side with the super-rich, but this is about much more than HM Gov doing away with clever tax mitigation schemes.

In the first place, there is something fundamentally wrong with taxing income that has been given away. If foregone, it's simply not income.

Secondly, this is about the least effective way of taxing the rich I can think of. The choices for philanthropists become very stark. A wealthy someone who wants good causes to benefit from say half of their income will have the choice of paying income tax at 45 % or, if they go ahead and donate, 145 %. Would you?

No, it's not the rich who will be penalised to any great extent. The real losers will be those at the bottom of the heap who depend on charity, plus educational and research institutions, which lay foundations for future prosperity. These proposals rob the worst off in society today and once again the next generation. All in a desperate attempt by a creaking government to balance the books today.

Oh the wonders of quantum economics, when the Os-Camron particle can be in Burma and on the moon at the same instant.

[Reply]

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