Lords reject Gift Aid proposal for political donations

Peer argued donations to political parties are as much in the public interest as those to charities

Peers have rejected a proposed amendment to the Political Parties and Elections Bill that would have allowed political parties to claim a version of Gift Aid on small donations made to them.

The amendment to the bill, which is at the report stage in the House of Lords, was proposed by Liberal Democrat Lord Goodhart. It would have permitted parties with at least two MPs in the House of Commons to claim the lower rate income tax paid by individual donors of up to £500 in any tax year provided the donors signed a declaration.

Goodhart said donations to political parties were as much in the public interest as donations to charities. He said tax relief would encourage small donations to parties and prevent them relying on large gifts. "That is a travesty of democracy and enables rich donors to have far too much control over party policy," he said. Legacies to political parties were already exempt from inheritance tax, he noted.

Labour peer Lord Campbell-Savours also supported the bill, but proposed an annual donation ceiling of just £15. "Many charities are engaged almost in political activity for which they get tax relief, but those who are primarily involved in the activity and want to support it get no tax relief at all," he said.

But Government spokesman Lord Tunnicliffe said there was no public appetite for tax relief on political donations at a time when politicians were held in such low esteem, even though estimates suggested the move would cost the Treasury only up to £5m.

He said relief would put political parties on an equal footing with charities, even though there was a clear difference between political campaigning by parties and by charities "in the context of supporting the delivery of their charitable purpose.

"There is a more or less universal consensus in the United Kingdom that charities are special. Sadly, the public do not hold political parties in the same regard and respect as they do the generality of charities."

The amendment was defeated by 129 votes to 83.

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