# Government's Budget offers little to charities

- Link: https://fundraising.co.uk/2012/03/21/government039s-budget-offers-little-charities/
- Published: 2012-03-21T23:01:55+00:00
- Author: Howard Lake

![](https://www.fundraising.co.uk/files/images/news/budget_day_2012_1.jpg)

![](https://www.fundraising.co.uk/files/images/news/budget_day_2012_2.jpg)

The Chancellor’s Budget announcements today have been described as “disappointing”
and “not a charitable Budget” by sector organisations and representatives. Its provisions
for tax relief could even “strangle” major gifts.

## Major gifts

**Limit on tax reliefs for high earners**

**Charities Aid Foundation** (CAF) has warned that [changes to tax relief announced by the Chancellor could result in lower tax relief on donations of more than £200,000](https://www.cafonline.org/media-office/press-releases/2012/tax-changes-strangle-donations.aspx).
CAF raised its concerns that this could reduce the amount donated to charity “by
millions of pounds each year”.

## Advertisement

**[CAF](http://www.cafonline.org) Chief Executive John Low** said: “Government can’t
have a philanthropy agenda on the one hand and then introduce measures like this
on the other. This change seems to run counter to the very idea of Big Society…

“Tax relief on major donations is not tax avoidance. It is supporting major donations
by people who in some cases are donating the proceeds of a lifetime’s work to charity.”

The [BBC](http://www.bbc.co.uk/news/business-17458362) explained that “a donation
of £2 million to a charity would only be tax efficient if the donor had an annual
income of £8m or more”.

CAF called for urgent talks with the Treasury to ensure these changes did not affect
major gifts in this way.

**Stuart Etherington, CEO of NCVO**, [shared this concern](http://www.ncvo-vol.org.uk/news/civil-society/budget-not-george%E2%80%99s-marvellous-medicine-voluntary-sector).
He said: “The cap on income tax relief for donations really sets alarm bells ringing,
as it could impact negatively on income from donations. Eight per cent of donors
give almost half of the amount that is given to charities every year, so this measure
could have very serious consequences.”

> Just heard of a donor who’s decided not to put £5m into their foundation after
> today’s Budget. Nice one George. [#philanthropy](https://twitter.com/search/%2523philanthropy)
> [#volsecbudget](https://twitter.com/search/%2523volsecbudget)
> — Beth Breeze (@UKCPhilanthropy) [March 21, 2012](https://twitter.com/UKCPhilanthropy/status/182550415680868352)

## Boosting giving

**No overhaul to tax effective giving methods**

[The Institute of Fundraising](http://www.institute-of-fundraising.org.uk) said 
that the Budget had “failed to deliver the action needed to boost giving and risks
leaving charities counting the cost”. The failure of the Government to simplify 
Gift Aid or Payroll Giving procedures or to invest more in fundraising training 
meant that it was “not making it easier for charities to deliver the vital services
that so many people depend upon,” said Peter Lewis, Chief Executive of the Institute
of Fundraising.

“We believe the Chancellor should have used the Budget to create an environment 
where charities can generate the extra funds they need.”

## Gift Aid

 * **Government to work with the charity sector to simplify the administration of
   Gift Aid in the context of charity shops.**
 * **Self Assessment Donate for tax returns will be withdrawn from April 2012.**
 * **Gift Aid Small Donations Scheme maximum of £5,000 retained but qualifying donations
   increased to £20**

Despite many meetings and much public discussion, there was minimal change to the
Gift Aid system.

As announced in the 2011 Budget, from April 2012 the Government will withdraw **
Self Assessment Donate** for tax returns for 2011–12 onwards. This offered tax payers
the opportunity to make tax-efficient donations of any tax owing to them.

Also as announced in 2011, the Government will introduce a new Gift Aid small donations
scheme from April 2013 to enable charities to claim a Gift Aid style top-up payment
on up to £5,000 of small donations, without the need to collect Gift Aid declarations.
Under the Gift Aid Small Donations Scheme charities will be able to claim the new
payment on donations of £20 or less, up from the original £10 or less.

The Government has said that it will work with the charity sector to simplify the
administration of Gift Aid in the context of charity shops.

As announced in the 2011 Budget, from April 2012 where taxpayers **donate a pre-
eminent object or collection of objects to the nation** and that object is accepted,
the taxpayer will receive a reduction in their tax liability based on a set percentage
of the value of the object they are donating. For individuals the tax reduction 
will be 30% and for companies 20%.

**Chas Roy-Chowdhury, Head of Taxation at ACCA**, said: “There are no surprises 
for ACCA when it comes to today’s Budget and Gift Aid or charitable giving – much
of what has been planned was announced in last year’s Budget.

“Simplifying the system is a must, as this will encourage people to donate and gift.
But it’s shame we have to wait until April 2013 for the Gift Aid Small Donations
Scheme. This was announced at Budget 2011, with the Government stating that it will
introduce a new Gift Aid small donations scheme from April 2013 to enable charities
to claim a Gift Aid style top-up payment on up to £5,000 of small donations, without
the need to collect Gift Aid declarations. Charities will be able to claim the new
payment on donations of £20 or less. But this is still a year away.”

## Inheritance tax threshold rate

The Chancellor confirmed the new IHT rate for deaths on or after 6 April 2012 where
10% or more of a deceased person’s net estate is left to charity.

## Overseas aid

The Chancellor confirmed the government’s continued commitment to meet its schedule
of investing 0.7% of national income in aid in 2013.

Development charity [Sightsavers](http://www.sightsavers.org) welcomed the commitment.**
Dominic Haslam, Director of Policy and Strategic Programme Support** at the charity,
said: “The UK government’s continued commitment to spending 0.7% GNI on aid will
have a huge positive impact on the welfare of the world’s most vulnerable people,
including those with disabilities. We know that aid can set these people and their
families on the path to a brighter, more self-sufficient future as well as alleviating
suffering in the short-term where needed.”

Sightsavers has a three-year Programme Partnership Arrangement with the Department
for International Development (DFID).

## Comment

### Watson Phillips Norman

**Gail Cookson, Strategy partner at response and DM agency [Watson Phillips Norman](http://www.watsonphillipsnorman.com)**,
said:

“The real challenge in any downturn is to regular giving since its harder to commit
if you’re unsure of your personal circumstances. This downturn has been no different,
and as our work with charities has shown, regular giving continues to be a tough
ask. However the Institute of Fundraising also reports that two thirds of people
give because they are asked to, whether that is via charity personnel on the street,
through their letterboxes via direct mail or in their living rooms through DRTV.
This is even more pertinent given that Osborne’s changes only affect wealthier, 
and therefore minority numbers of donors.

“The message is clear: if you don’t ask, you won’t get. if you’re asking now, make
it a tangible ask, so the public can see exactly what difference their hard-earned
pounds are making.”

### Convio

[Convio](http://www.convio.co.uk), which supplies fundraising software to the third
sector and works with charities such as Cancer Research UK, UNICEF UK and The Salvation
Army, believes the 2012 budget could been much more supportive to charities.

“George Osborne said it was a ‘reforming budget’ whilst the opposition said it was
a ‘millionaires’ budget’ – it certainly was not a ‘charitable’ budget’,” said **
Martin Campbell, UK MD, Convio**. “Gift Aid relief is so important for charities
and whilst we welcome the doubling of the maximum donation amount for which they
no longer have to get signed gift aid declarations, this could easily have been 
greater. The overall amount charities can claim for stays the same at £5,000 so 
there is little tangible difference.”

“When you factor in the capping of tax relief to prevent the rich reducing their
tax liabilities, which even the government has admitted may impact on charitable
donations, then it is clear that helping charities was not top of the agenda for
this budget.”

### DMS

**Nick Pride, Managing Director at Cheltenham-based direct marketing agency [DMS](http://www.dmsagency.co.uk)**,
said:

“At a time when budget cuts and economic constraints are putting ever greater burdens
on the third sector, and when the sector itself is having to cut services and staff,
it is hugely disappointing to hear not one single mention of the sector in the budget
speech, and to find ‘charities’ mentioned in just two sections of the budget document.

There was such hope that **Gift Aid** would be simplified, maybe even strengthened,
as a way of supporting the additional burdens that charities will inevitably be 
shouldering. The outcome is very disappointing. There are just a few small changes
which will help small charities, but nothing remotely to respond to the lobbying
and hope of the third sector in recent months.

Whilst the headlines in the speech talk about a simplification of pensions, and 
a suggestion that pensioners will be better off, there is a key piece of detail 
that could hit our core donors very hard. There will be a **freeze on age-related
tax allowance**s that will effectively reduce the income of many pensioners in the
coming years. Amongst a constituency that we already know is hard-pressed, having
to cut back on expenditure, and reducing their donations to charities, this is really
bad news, and it will hit fundraisers hard.

### SCVO

The [Scottish Council for Voluntary Organisations](http://www.scvo.org.uk) said 
that there was nothing in the Budget that addressed “the real problems facing people
today”.

**Martin Sime, Chief Executive of [SCVO](http://www.scvo.org.uk)**, said: “The UK
Government is investing to give tax benefits to the rich when it should be investing
in other priorities such as tackling youth unemployment that could help to boost
the economy and make a real difference to people.”

### NCVO

[NCVO](http://www.ncvo-vol.org.uk) summarised the Budget. “In some respects, this
budget has surprisingly little to say and does not go far enough to support charities
as they face a triple whammy of rising costs, falling income and increased demand”,
it said.

### Scott-Moncrieff

**Morag Watson, Tax Director, at charity specialist accountants Scott-Moncrieff**
who have offices on Edinburgh and Glasgow:

“George Osborne had little to say on the subject of charities in this year’s Budget.
The measures focus on Community Amateur Sports Clubs.

“Until now, HM Revenue & Customs has continued to register Community Amateur Sports
Clubs (CASCs) and allow Gift Aid repayments on a concessionary basis. Legislation
is currently in place which provides a specific exemption for CASCs from corporation
tax on interest income and Gif Aid income. However as CASCs are not treated as “
charitable companies” for the purposes of the Gift Aid legislation, there is no 
statutory basis for them to claim repayments of income tax under Gift Aid. Changes
will be made which will apply retrospectively from 1 April 2010 for Gift Aid and
from 6 April 2010 in respect of Gift Aid claims. This will ensure that CASCs will
not need to amend their constitution in order to remain registered as a CASC and
they will have a statutory right to make a claim to a repayment of tax under Gift
Aid.

“In addition, the practice of making “**in-year**” claims for repayment of tax on
Gift Aid donations has now been put on a statutory footing. HM Revenue & Customs
has made certain repayments of Gift Aid to charitable companies and CASCs where 
a claim is made outside a tax return. Strictly, these claims should be made in a
tax return and this measure will simply legislate an existing extra-statutory concession.
This measure will apply for claims made on or after 6 April 2012. “

## Other resources

[NCVO’s Budget Report card](http://www.ncvo-vol.org.uk/sites/default/files/UploadedFiles/budget_2012_ncvo_report_card.pdf)

[Discussion on Twitter via #volsecbudget on the impact of the Budget on the voluntary sector](https://twitter.com/#!/search/volsecbudget).

.

[Giving: the cold shoulder?](http://giving-thought.tumblr.com/post/19684603109/giving-the-cold-shoulder-philanthropy-in-the-budget)–
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