Treasury urged to reform Gift Aid

The Charity Finance Directors' Group has repeated its call for the administration of Gift Aid to move to an accounts-based system.

In its submission to the Treasury on what the 2008 Budget should include, the umbrella body, which represents 1,400 finance directors in the sector, says charities should be able to base Gift Aid claims on a proportion of their total voluntary income that reflects the ratio of higher, standard and non-taxpayers who donate.

The CFDG says the current system of Gift Aid declarations by donors is “clumsy and time-consuming” and a waste of charitable resources.

The submission also makes a raft of recommendations on trading. It argues that the Government should allow charities to carry out all trading internally, rather than make them set up trading subsidiaries. The proposal was part of the 2002 Strategy Unit report on charity law reform, but was rejected by the Government because it could create unfair competition for small businesses.

The CFDG also wants sponsorship to be classified as primary purpose trading and it has asked for the small charities trading exemption – the volume of trading charities are allowed to carry out without the need to create a trading company – to be raised from £50,000 to £250,000.

Kate Hand, policy and campaigns officer at the CFDG, said: “The difficulties that trading presents for charities are not only against the grain of the Government’s vision for the voluntary sector but fail to benefit the Government, because profits from trading subsidiaries are Gift-Aided back to parent charities.”

The CFDG’s submission also calls on the Government to implement the demands of the Charity Tax Group on irrecoverable VAT.

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