Call to Government to Reform Gift Aid for Higher Rate Taxpayers
Howard Lake | 17 August 2009 | News
The Institute of Fundraising has presented HM Treasury with detailed proposals on reforming Gift Aid for higher rate taxpayers.
The Institute has called upon the Government to include the proposals in the autumn pre-budget review, with a view to implementation in 2010.
The Institute is lobbying Government to introduce modifications to the existing system which would allow higher rate taxpayers to donate the full amount of tax relief which they are eligible to reclaim back to charities.
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Under the current system, most higher rate tax payers believe they can reclaim the difference between the basic and higher rates of tax for themselves, but in practice the Government keeps 40% of this sum for itself.
As even this can only be reclaimed by the minority of donors who complete a self-assessment form, very few people claim back higher rate tax relief on anything but the largest donations.
Allowing the charity to reclaim the full amount of tax paid by the donor is a straightforward way to allow a gift to be given fully tax-effectively and has the potential to inspire more people to give and so substantially increase the amount of money charities receive through the Gift Aid mechanism.
If the Institute’s proposals are accepted, a donation of £1000 would attract a full £666 in Gift Aid, and so be worth £1666 to the charity.
Gift Aid provides an essential income stream by enabling charities to increase the value of donations through tax and transitional relief. It accounts for approximately 90% of all tax-effective giving and recent figures suggest that over £947m per annum is given back to UK charities through Gift Aid and Transitional Relief.
Louise Richards, Director of Policy and Campaigns at the Institute, comments:
‘We believe that with this simple change to the Gift Aid mechanism, everyone wins. If the Government is serious about its commitment to strengthening the voluntary sector, then there is no reason why it should not implement these changes.
‘We are not calling for a radically new system, but for changes to the existing system which would remove obstacles to the take up of the existing concession.
‘At the same time, the substantial increase in income resulting from the change will mean that charities are much better placed to survive the recession and continue to deliver essential services in health, education and other areas.’
The Institute is also continuing to work with other sector organisations including the National Council of Voluntary Organisations, Association of Chief Executives of Voluntary Organisations, Charity Finance Directors Group, Charity Tax Group and Charities Aid Foundation, to press for the further simplification of Gift Aid through the introduction of an ‘opt out’ rather than an ‘opt in’ system.
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For further information please contact:
Diana Mackie Tel. 020 7840 1027 / 07793 802 852
Institute of Fundraising email:
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NOTES TO EDITORS
1. Institute of Fundraising
The Institute of Fundraising’s (www.institute-of-fundraising.org.uk) mission is to support fundraisers, through leadership, representation, standards setting and education, to deliver excellent fundraising. Members are supported through training, networking, the dissemination of best practice and representation on issues that affect the fundraising environment. The Institute of Fundraising is the largest individual representative body in the voluntary sector with 5000 Individual members and 300 Organisational members
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.