HRMC will investigate the benefits and cost of allowing online gift aid filing, but will not be funding any gift aid database, the Economic Secretary to the Treasury has stated.
In a letter to Chartered Institute of Taxation chief executive Peter Fanning, responding to his recent report into gift aid reform, Justine Greening also ruled out extending gift aid to non-financial gifts, such as donated goods or expenses, and bringing payroll giving into gift aid.
Fanning’s report was submitted to the Treasury on 13 October but only published on Friday following the announcement that the Gift Aid Forum had come to an end.
Greening’s letter to Fanning is a frank explanation of what measures the government is willing to consider and discuss with the Gift Aid Forum’s successor, the Charity Tax Forum, which will have a wider range of charity taxation and incentive issues to review under its remit.
One of the issues Greening has already directed the HRMC and new forum to investigate is the long-running dilemma of how to encourage more higher-rate taxpayers to claim and redirect gift aid on their donations, following suggestions in the report and from charity sector groups that this is a critical area of reform.
Online filing
On the subject of moving gift aid filing online, a point pushed heavily by the Charities Aid Foundation in particular, Greening said that resource would rule. “There are potentially considerable benefits for charities and HMRC from online filing of gift aid claims. I am keen to establish whether this offers real value for money,” she wrote.
She estimated that it would take 18 months to develop an online gift aid system and that in considering whether to pursue it, HMRC would have to “consider this against its other competing priorities”.
Gift aid database
Acknowledging sector support for a gift aid database, Greening tried to lower charities’ expectations of government assistance, writing that HMRC will help the sector to ensure any such database is compliant with the law and requirements, but it will not be digging into its own pockets to fund the development of the proposed database.
She said that HMRC is in the process of putting together "intelligent forms" for filing gift aid in the new year, hoping that the new forms will help charities lodge accurate claims and avoid common errors.
She called on charities to keep engaging with the HMRC on technological developments that can be utilised by the sector. “I would urge charity representatives to make sure HMRC are kept informed of innovations so they can advise on how to ensure gift aid can apply,” she wrote.
Promoting gift aid
Greening acknowledged that the profile of gift aid needs to be raised among both donors and charities. “There is a job to be done both to raise awareness of gift aid… and to improve the knowledge and capability of charities,” she wrote. She pledged to work personally on how to encourage tax professionals to donate their time to charities to help improve charities’ gift aid processes.
Greening ended her letter by characterising the Gift Aid Forum as “useful”.
