Charities £236m a year poorer after tax credit changes

17 Jan 2008 News

The charity sector could have lost out on around £236m per year as a result of the Treasury's decision to phase out dividend tax credits in the 1997 Budget, according to new figures released by investment managers CCLA.

The charity sector could have lost out on around £236m per year as a result of the Treasury's decision to phase out dividend tax credits in the 1997 Budget, according to new figures released by investment managers CCLA. Alex Hardie reports.

The loss was incurred in spite of warnings made to the Treasury back in 1998, when CCLA, among others, alerted it to concerns that pension funds would not be the only victims of this change, with charities standing to lose 20 per cent of their UK investment income.

CCLA calculates that the decision has cost customers in two of its investment funds aimed at charities £10.6 million per year. Furthermore, the analysis reveals that these charity investors are now required to raise a further £348 milion of capital to make up for this loss of income.

Extrapolating this loss of endowment income to the charity sector as a whole would mean the sector is £236 million poorer every year, requiring it to raise a further £7.6 billion in capital. CCLA said it would be writing to the Office of the Third Sector and the Treasury to highlight the full effect of the tax changes on the charity sector.