Editorial: Budget's nudge to the giving agenda

The 2011 Budget doesn't help the sector with public funding cuts, but it does move forward the government's agenda on philanthropy, says Stephen Cook

Stephen Cook, editor
Stephen Cook, editor

Budgets are often a let-down for charities. This time, however, there was quite a lot in it for them, including an interesting move on inheritance tax and measures to modernise Gift Aid. George Osborne's estimated gain of more than £500m for the sector is optimistic and won't come for some time, but there are things to feel glad about.

One benefit will come in 2013 from allowing charities to claim Gift Aid on £5,000 worth of cash donations without producing the usual donor declarations. It has been impossible in practice to claim the relief on coins dropped into tins, and this unfairness will be remedied to the extent that hundreds of small charities will be eligible for an extra £1,250 - that's certainly not to be sniffed at. As a precaution against fraud, only charities in existence for at least three years will qualify.

In the longer term, a bigger benefit could come from the promise that charities will be able to make their Gift Aid claims online, probably also from 2013. This is expected to help charities to claim more of the £750m that it is estimated they miss out on each year because of the clumsiness of the existing all-paper system.

The move to bring inheritance tax down from 40 to 36 per cent from next year for anyone who leaves 10 per cent of their estate to charity, does not mean that more of that estate will be available for other beneficiaries, but it does reduce the disbenefit of a bequest. On the face of it, this will interest only those making a bequests anyway; but it also puts the subject firmly on the agenda of financial advisers who might have hesitated before now to raise the subject with more wealthy clients. Is the Chancellor putting a toe here in the wider waters of tax incentives for giving?

There isn't much in the 2011 Budget to help the sector with the more immediate problems of public funding cuts and redundancies, and the jam will not come until tomorrow. But at least there is some jam, and the government deserves some credit for nudging forward its declared agenda on giving and philanthropy.

See our news round-up of the 2011 Budget

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