Treasury agrees to work on 'opt-out' system for Gift Aid

Research also underway on high rate taxpayers

Treasury: meeting last week
Treasury: meeting last week

Hopes are rising among voluntary sector leaders that the Treasury is willing to change Gift Aid from an 'opt-in' to an 'opt-out' system.

This would mean donors would no longer have to declare that they were taxpayers and give permission for the tax they had paid on their donations to go to charity.

Instead, charities would record donors' names and addresses and send them a letter explaining that the tax would be claimed back by the charity unless they objected.

Optimism that the change could come into effect from 2010 onwards grew after a meeting last week between sector leaders and Stephen Timms, the Financial Secretary to the Treasury.

The meeting took place after last week's publication of the third sector action plan, which committed £42.5m to programmes for volunteering, modernisation and grants in deprived areas.

Under the plan, HM Revenue & Customs will complete its research on Gift Aid and higher-rate taxpayers by September. Higher-rate taxpayers can claim back the difference between standard and higher-rate tax on donations.

If the research shows that the tax break is little used and does not motivate people to give, it would strengthen the case for giving the difference to charities instead.

Stephen Bubb, head of chief executives body Acevo, said: "If the research comes out right, I think they will do it."

Meanwhile, the accounts-based Gift Aid system the sector pushed for strongly last year has been set aside. This would have allowed charities to claim Gift Aid in proportion to the voluntary donations shown in their accounts.

Stuart Etherington, chief executive of umbrella body the NCVO, said this would have broken an important principle of tax policy. "It would become part of public expenditure and be a very different beast," he said. "They aren't going to shift and we backed off on that."

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