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Concern at lack of further discussion of radical gift aid reform

Fundraising | Gemma Ware | 1 Dec 2007

The Treasury is to hold a series of follow-up meetings with the sector as part of its gift aid consultation in order to find out more about the awareness-raising measures needed to improve take-up of the scheme, and what extra support could be given to smaller charities.

However, there is some anxiety within the sector that the government may be trying to manage expectations by shutting down further discussion on possible, more radical reforms of gift aid proposed during the consultation.

Last week the Treasury published a summary of the sector’s responses to its gift aid consultation, which aims to examine ways to increase the take-up of the tax-effective scheme.

It also announced plans to hold two groups of follow-up meetings in London in January and February to get a clearer understanding around some of the issues raised during the consultation.

One group will look further at what guidance, tools and awareness-raising measures could help increase take-up of gift aid, while the other will consider what targeted support could be offered to small charities to help them access and administer the scheme.

Helen Donoghue, director of Charity Tax Group, said it was too early to predict the outcome of the consultation, but added the lack of further discussions about reform of the system did “raise some questions about the way forward”.

The summary of responses to the consultation included a number of suggestions for more radical reform of gift aid, including proposals for the introduction of a composite rate based on charities accounts, put forward by a coalition of sector umbrella bodies.

However, Louisa Darian, policy offer at the NCVO, said there was some confusion in the summary that the proposed accounts-based scheme would result in de-linking gift aid from the tax system. “This is not our intention,” she said.

 “It would be useful for the government to focus one set of the follow-up discussions on the sector’s proposals around a composite rate of gift aid and how it might be applied across the whole of the sector.”

Other proposals outlined in the consultation included the promotion of gift aid in schools and the use of government correspondence such as tax returns to highlight the scheme.

A number of suggestions were also made around gift aid for higher rate taxpayers, including restricting the higher rate tax relief to donations over a certain value, abolishing the higher rate relief and using savings to support small charities, and combining the basic and higher rate relief into one composite rate.

A Treasury spokesman said it had gained a wide picture of the sector’s concerns through the consultation and that it was “seriously considering” all the ideas put forward. “On some areas, the sector has put forward very clear proposals for reform.”

However, the spokesman said there were other areas around guidance and support for small charities where the views expressed were “more general” and the government could “benefit from further clarification of the sector’s concerns to ensure that we have full detail on all of the proposals and to make sure our consideration of the different proposals is comprehensive.”

The Treasury has not set a date for the final response to the consultation, but the government will report on its progress in the spring.

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