Christian charity Stewardship has calculated that donations to its cause totalling £11.7m in the last year would have been at risk under the government’s proposed cap on tax reliefs.
Kevin Russell, Stewardship’s technical director, said Stewardship trawled through its database of all donations of more than £50,000 in the past year to work out what the Chancellor’s mooted tax relief cap might cost the charity.
“Of course, this figure is the worst-case scenario because we don’t know the individual income positions of the donors,” he said. “But what we do know is that a number of our donors give quite sacrificially and some of them even work out how much they need to live on and give the rest away. In some cases these people can be giving 90 per cent of their income away.”
Russell said it was impossible to extrapolate the figure across the whole sector to arrive at a sector-wide cost, “because being a church-based charity our giving levels are possibly higher than other charities”.
“But I hope to get some information back from our donors that have given large sums to gauge what their reaction will be.”
He said the messages emanating from government seemed to suggest that HMRC is committed to the cap because officials there don’t think it will affect very many people.
“They seem to be of the view that next to no-one gives more than 25 per cent of their income,” said Russell, who is also vice-chair of Charity Tax Group. “That’s patently rubbish, both from an income perspective but also if someone comes into a windfall or sells a business.”
Russell said that Stewardship has not yet contacted its donors about the plan, yet several have already got in touch with the charity to express their disbelief. “They’re saying things like ‘I’m not going to give until the position becomes more favourable’. Some of them run companies and have a choice whether to pay money out to themselves or not, and they’re saying they’ll just leave it in the company until such time as the climate changes.”
He said he thought the policy was “highly political, the fallout of reducing the 50 per cent rate”.
“They seem unrepentant at the moment. There’s an element that they don’t believe people give at the levels that some do and they want to go ahead presumably for political reasons.
“But I cannot see it is right to limit tax relief where the donor is getting nothing back personally. They’re giving for the public benefit and just at a time when charities really need it.”
Chancellor George Osborne defended the cap before the Commons Treasury Committee yesterday. Asked by Conservative MP David Ruffley if he had estimated how much the tax relief cap will cut charitable giving by, Osborne said the Treasury would consult on this. But he added that all the government was trying to do was ensure that people couldn't reduce their tax bills to zero per cent.
Hurd hears sector concerns on tax relief cap
Minister for civil society Nick Hurd attended a roundtable with key sector figures this morning to hear their concerns about the proposed cap. Afterward, Acevo's deputy CEO Peter Kyle tweeted: "Wasn't all talk, it will lead to action."
A regular meeting of HMRC’s Charity Tax Forum is due to go ahead on 3 May and Russell said officials have already indicated that the issue will be discussed then.
