NCVO opens up Gift Aid debate by asking for members' views

The NCVO has come out strongly against the idea of protecting charities from changes in tax levels by uncoupling Gift Aid from the basic rate of income tax.

The proposal for a 'Gift Aid flat rate' emerged after Gordon Brown's Budget announcement of a reduction of 2p in the basic rate brought predictions that the income of charities could fall by £70m.

In a discussion paper for the Treasury review of Gift Aid, which began last month, the umbrella body says that such variations are to be expected and "charities should be planning their expenditure accordingly".

It also warns that if Gift Aid is uncoupled from tax rates, the income would cease to be unrestricted funds and would become part of public expenditure, subject to rules and ministerial control.

The paper will be circulated to NCVO members to gain feedback. "We're trying to shape our response to the consultation by talking to members about their problems with Gift Aid," said Liz Atkins, policy chief at the NCVO. "We want to know what we should do, what charities in general should do and what government should do."

It comes as the sector's working party of seven umbrella bodies this week finalises a standard set of questions to circulate among their members as part of the consultation for the review.

The Institute of Fundraising, which has championed the uncoupling of Gift Aid from tax rates altogether, said this week it would seek further guidance from its members on this issue.

The NCVO paper suggests improving the administration of Gift Aid, which it says can be "onerous and confusing". It points out the anomaly that higher-rate taxpayers can get a personal tax advantage from Gift Aid.

"This is particularly incongruous given that wealthier people donate a smaller proportion of their income than the less well-off," it says.

But it also emphasises that "the onus remains with individual charities" on Gift Aid: "The role of government is to create an environment that is conducive to maximising income from charitable giving, not to collect or increase donations."

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