Proposal to merge national insurance and income tax 'could boost Gift Aid'

Sector leaders call it an opportunity to 'inject some funds' and urge full involvement with the coming consultation

National insurance could be merged with income tax
National insurance could be merged with income tax

A proposal in today's Budget to merge national insurance and income tax could lead to major benefits for charities, sector leaders have said.

However, they cautioned that the sector would have to work hard to make sure it won a good result from the forthcoming consultation process.

If national insurance was merged into income tax to produce a single tax at current levels, the amount of Gift Aid that could be claimed would rise from 25p on each £1 donated to 47p on each £1 given.

Charity leaders said they did not believe the government would allow Gift Aid to rise to such an extent, but insisted the sector could win benefits if it engaged closely with the consultation.

"This could be an opportunity to really inject some funds into the sector," said Caron Bradshaw, chief executive of the Charity Finance Directors' Group. "We have to make sure we engage with this process closely to get the maximum output for charities."

John Hemming, chair of the Charity Tax Group, said he thought it was unlikely the government would agree to a process that almost doubled the amount of Gift Aid charities could claim.

"The sector's going to have to work hard to respond to this calculation," he said. "There will be a lot to fight for, and we'll have to make sure it goes well."

See round-up of 2011 Budget stories

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