Think tank urges wide-ranging review of charity tax reliefs

New Philanthropy Capital wants ministers to examine what happens to the £4bn of charity tax breaks the sector gets each year

The think tank New Philanthropy Capital has called for a wide-ranging review of charity tax reliefs to make them work better for the voluntary sector.

NPC has today urged the government to examine where the near £4bn generated each year in charitable tax relief and the extra resources it generates goes in the charity sector and whether it can be improved upon.

The think tank said any review should be revenue-neutral and not used to cut financial support to the sector.

The charity sector received about £4bn in tax reliefs in the 2016/17 financial year, with Gift Aid and business rates relief accounting for £1.28bn and £1.87bn respectively.

VAT reliefs are worth £400m to the charity sector and stamp duty land tax reliefs are worth approximately £220m, according to figures provided by NPC.

Individual people also get charitable tax reliefs, with inheritance tax reliefs worth £840m in 2016/17 and the higher-rate relief on Gift Aid worth £520m.

Other charitable reliefs include payroll giving, social investment tax relief and gifts of shares and property.

Dan Corry, chief executive of NPC, said: "As politicians return to Westminster, they need to look at how they can best use resources to support a strong and thriving civil society. We think that a review of the £4bn or so of tax breaks currently on offer is an important part of this process.

"NPC spends a lot of time urging individual charities to look hard at the way they allocate their resources to see if they maximise impact. It is only right that government should do the same."

The call comes after NPC wrote an open letter to the political parties before the general election that set out the case for strengthening the charity sector, including moving the Office for Civil Society to a "cross-cutting department" such as the Cabinet Office.

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