FINANCE NEWS: Proposal to end Gift Aid scheme tax rebate

Patrick McCurry and Mathew Little

Charities that are tourist attractions could lose out under proposed changes to Gift Aid rules on donations.

In recent years, many major tourist attractions run as charities have given visitors the option of making a donation rather than paying an entry fee. The charity can then reclaim an extra 28.2 per cent from the Government under the Gift Aid scheme.

But in the proposals accompanying the Chancellor's pre-budget report last month, it was announced that this practice will be abolished.

"This will cost heritage and conservation charities millions of pounds a year," said Sophie Chapman, policy and communications officer at the Charity Finance Directors' Group.

Michael Rogerson, head of the charity and not-for-profit group at accountants Grant Thornton, said the announcement was "very disappointing".

He said: "The Chancellor has removed a valuable source of tax relief that charities have come to rely on." He added that many charities in recent years had replaced old tills with new ones that could handle donations and Gift Aid.

Among the charities affected are the National Trust. The trust's head of media, Julian Lloyd, said it would cost the charity hundreds of thousands of pounds a year.

He said: "We've been following government guidance but now they're changing it - because the Government wants to extract extra revenue."

However, the proposals will be subject to consultation before they are introduced in the Finance Bill 2004. The Charities' Tax Reform Group will lobby government officials to amend the planned changes, cited as part of a package aimed at "tackling tax avoidance" and tightening loopholes.

But CFDG's Chapman said: "The guidance on the Inland Revenue website almost advises charities to ask for Gift Aid donations instead of entry fees, so it's not as though it's a practice that charities have been sneakily engaged in."

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