The government has pledged to set up a new working group to revise the model gift aid declaration and develop new marketing collateral to try to increase take-up of the tax relief by donors, as part of its Autumn Statement.

In the report which accompanied the Chancellor’s speech this morning, the government said it wanted as many eligible donations as possible to attract gift aid, and so it will allow intermediaries to play a greater role in operating gift aid in order to reduce the number of instances where a new declaration has to be given.

However, it will consult the sector further on this before changing the law.

John Low, CEO of Charities Aid Foundation, said that modernising gift aid could liberate "potentially hundreds of millions of pounds a year".

Tackling tax avoidance

The government also said it would tighten the laws around the definition of charity to ensure that operators of tax avoidance schemes cannot claim charitable reliefs.

On this, Caron Bradshaw, CEO of CFG, said: "It’s interesting that following the publication of the NAO report into gift aid and on the Cup Trust, it looks like we are seeing some moves to tighten up the regulation of charities in the tax system.  Legislation will be implemented to absolutely make clear that vehicles set up purely to avoid tax cannot be entitled to charity tax relief – something it’s hard not to agree with.  As usual, we wait to see the detail."

But Charity Tax Group chair John Hemming said that while moves to stop abuse of tax reliefs "can only be good for the reputation of the sector", the proposals will have to be scrutinised closely. 

He said: "We have sought – and received – assurances that no innocent charities will be caught by this legislation but we will, of course, monitor the fine detail very carefully and make appropriate representations if necessary.”

Rates relief for charity shops

The government also promised to introduce a discount of up to £1,000 on business rates for retail premises including charity shops with a rateable value of up to £50,000, for the next two years. 

There will also be a 2 per cent cap on business rates increases for all non-domestic rateable premises from April 2014, and a 50 per cent discount on rates bills for all businesses occupying empty premises.

Jane Tully, head of policy at CFG, said these measures would work for small to medium high street  charity shops and “will be welcomed by the sector as a measure to keep down operational costs for charities with charity shops”.  

The government will also “discuss options for longer-term administrative reform of business rates post-2017”.

Joint registration portal

The government also committed to introduce a new IT system that will allow organisations to apply for charity registration and charitable tax reliefs, through a single website, instead of having to apply separately to the Charity Commission and HMRC.

In other announcements, the government promised to:

• Make company donations to community amateur sports clubs eligible for gift aid from April next year
• Bring in new legislation to make it clear that charities can benefit from partial relief from stamp duty land tax if they buy property with a non-charity.  Once the Finance Bill receives Royal Assent, charities will be able to claim relief on their proportion of the purchase price
• Amend the Cultural Gifts Scheme to cover estate duty, and
• Empower Work Programme advisers to force claimants of Job Seeker’s Allowance to work full-time for six months for a local charity.