Chancellor George Osborne says unlimited use of reliefs by taxpayers, including donors, cannot be right; he also plans to review retail Gift Aid and scrap VAT exemptions for alterations to listed buildings
A cap on tax relief claimed by people making gifts to charity, a review of retail Gift Aid, £40m for the advice sector and the scrapping of a VAT exemption for alterations to listed buildings were among the major announcements affecting the voluntary sector in today’s Budget.
In his speech to parliament, the Chancellor, George Osborne, said it was right that the country had tax reliefs that promoted investment, supported charitable giving and reflected genuine business losses.
"But it can’t be right that some people make unlimited use of these reliefs year after year," he said. "Everyone in this country and particularly those with the highest incomes should contribute a fair share to the Exchequer.
"From next year, anyone seeking to claim more than £50,000 of these reliefs in any one year will have a cap set at 25 per cent of their income."
Experts warned the move could have a significant impact on charitable giving by major donors, although documents released by the Treasury say the government intends to work with philanthropists to ensure that the measure does not have a significant effect on charities that depend on large donations.
The papers reveal several other moves. The government intends to "work with the charity sector to simplify the administration of Gift Aid in the context of charity shops".
It also intends to charge VAT on approved alterations to listed buildings from 1 October, as part of moves to close certain VAT anomalies. The Department for Culture, Media and Sport will extend its ‘listed places of worship’ grant scheme in the light of the changes to VAT on alterations to listed buildings.
And the Treasury will carry out an internal review to examine the financial barriers to social enterprise and will relax the restrictions placed on community investment tax relief, a specialist tax relief for social investors. It plans to introduce new rules that would allow investors to carry forward unused tax relief granted under the scheme and give community development finance longer to lend on the money they receive, the papers say.
The government also plans to to amend legislation covering community amateur sports clubs to ensure it "operates as originally intended".
The Budget documents confirm previously announced measures aimed at the voluntary sector, including the introduction of a Gift Aid "small donations scheme" from April 2013 that will allow charities to claim a "Gift Aid-style top-up payment" on up to £5,000 of small donations without the need for Gift Aid declarations. They will be able to claim this on donations of £20 or less, the documents say.
See our round-up of stories on the 2012 Budget