Call for reform on Gift Aid and higher-rate taxpayers

Institute of Fundraising wants charities to be able to claim full amount of tax back

The Institute of Fundraising has urged the Government to reform Gift Aid to allow charities to reclaim the full amount of tax on donations from higher-rate taxpayers.

The institute has presented the Treasury with a detailed set of proposals for changes to the Gift Aid system, which it hopes will be included in the autumn pre-budget review and put in place in 2010.

Under the proposals, donors would be able to tick a box saying that they were higher-rate taxpayers and had surrendered the right to reclaim any of the tax on their donation.

Currently, charities claim Gift Aid at the basic rate on all donations, regardless of whether or not the donor is a higher-rate taxpayer. The Government keeps 40 per cent of the difference between the basic and the higher rate. Although higher-rate taxpayers can reclaim the other 60 per cent, very few donors do this in practice.

Louise Richards, director of policy and campaigns at the institute, said that if the proposals were accepted, a donation of £1,000 could be worth £1,666 to a charity.

She told Third Sector: "If the Government is serious about its commitment to strengthening the voluntary sector, 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 that would remove obstacles to the take-up of the existing concession," she said.

The institute is continuing to work with chief executives body Acevo, the Charity Tax Group, the Charity Finance Directors Group, the Charities Aid Foundation and the NCVO to lobby for the introduction of an ‘opt-out' rather than an ‘opt-in' Gift Aid system.

Its figures show almost £950m is given to charities through Gift Aid and transitional relief every year.

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