Editorial: Gift Aid reform is a real opportunity

Allowing charities to claim a larger slice of tax would boost the Government's voluntary sector credentials, argues Stephen Cook

Stephen Cook, editor, Third Sector
Stephen Cook, editor, Third Sector

Government ministers are facing a difficult party conference season, and are under pressure to rustle up some political initiatives that might avert the general election defeat that seems inevitable, given current polls. So what is third sector minister Angela Smith mulling over as she strolls round the Essex marshes or takes a pedalo ride around Southend Pier?

Measures that help the voluntary sector are unlikely in themselves to sway votes in the same way as moves on the big issues of the economy, health or education. But they can help to set the mood music about the kind of society politicians want to say they stand for.

Labour can fairly claim it has changed the voluntary sector landscape in the past 10 years, but a pre-election flourish would not come amiss and there is a real opportunity in the reform of Gift Aid.

At present, only the basic rate of tax from a Gift-Aided donation by a higher-rate taxpayer can be claimed by the recipient charity: the rest of the tax either stays with the Treasury, or is shared between the Treasury and the higher-rate taxpayer, if the taxpayer takes the trouble to make a claim.

Now the Institute of Fundraising has produced a proposal that would give higher-rate taxpayers the option of authorising the charity to claim their slice of the higher-rate tax. Making it optional reduces the risk of alienating more wealthy donors, but would also present higher-rate taxpayers with a potentially off-putting declaration that they would not also claim the rebate themselves in their tax return.

The pressure on public finances makes it unlikely that the Treasury will be in any mood to lose revenue unless it has to, and in the big electoral picture such a reform would not loom large.

However, it would address a perceived anomaly, the sums involved would not be large, and it would add another vital element to the Government's voluntary sector credentials.

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