Income tax exemptions will be near £2bn, says HMRC

Revenue & Customs forecasts for the tax year 2016/17 say exemptions for the charity sector will rise by £70m on the previous year

HMRC
HMRC

The value of income tax exemptions for the charity sector are expected to rise by £70m to almost £2bn in the current financial year, new government forecasts say.

An updated list of the value of the main tax reliefs, which was released by HM Revenue & Customs last week, shows income tax exemptions for the charity sector are expected to cost the government £1.96bn in 2016/17.

The estimated figure includes VAT and stamp duty land tax relief for charities, as well as the income derived from Gift Aid.

The provisional income tax relief figures are an increase of £70m on those for 2015/16 and show that charities’ income from these reliefs have increased by almost £400m since 2012/13, when they were worth £1.59bn.

Last year’s statistics, which included business rates relief, which is not included in the latest figures, showed a record high tax relief income for charities of £3.7bn.

The latest statistics also show that stamp duty land tax relief for transfers to charities is estimated to be worth £185m in 2016/17, a reduction of approximately £95m on the year before.

But the notes to the latest statistics explain that SDLT was reformed in the 2014 Autumn Statement and large changes in SDLT relief are common because of numerous factors, in particular "very large one-off relief claims".

The notes say that the SDLT data for 2015/16 is provisional and might still change.

VAT zero rating for supplies to charities is expected to be worth £400m for 2016/17, HMRC’s figures show, compared with £250m in 2012/13.

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