A proposed windfall land tax could be one of the most damaging pieces of legislation to hit the voluntary sector in recent memory, according to the Charity Tax Group.
The group said the planning gain supplement, a Government proposal to tax the increase in land value derived from planning permission, would hit charities considering developing their premises particularly hard. It would also affect charities that have been left property in supporters' wills.
"We are extremely concerned about the planning gain supplement, because, unlike commercial developers who would have profits against which to offset the tax, charities are likely to be doing the development for their own purposes," said Helen Donoghue, director of the CTG.
"It would make lots of things that the sector wants and needs to do, such as engaging in public service delivery, impossible."
Government proposals have not established the rate of the tax, but the CTG and the British Property Federation believe that it could be as high as 20 or 30 per cent.
"Charities have enough problems as it is with their irrecoverable VAT, so we hope that the Government will listen to our proposals and make an exemption for charities," said Donoghue.
The British Property Federation has urged all charities to brief themselves on the matter and lobby against the proposals.
The Government has said it is open to alternative suggestions, but is pursuing its preparations for the tax until a suitable proposal has been identified.
