I was thrilled to see a few crumbs being thrown to the charity sector in last month's Budget announcement. Never look a gift horse in the mouth, as they say.
But the trouble with tinkering with tax reliefs for donors is that the onus is often on charity staff and volunteers themselves to try to communicate the changes. If, as a charity finance director, I can't figure out how the new inheritance tax rule is going to work, how will fundraising staff and volunteers possibly explain it?
For example, read the following Budget excerpt and see if you don't need to resort to algebra to understand it: "Under new rules announced in the 2011 Budget, the 40 per cent IHT rate will be reduced to 36 per cent where 10 per cent or more of a deceased's net estate (after deducting inheritance tax exemptions, reliefs and the nil rate band) is left to charity."
It was good, then, to read recently that HM Revenue & Customs is to review all of its charity guidance in order to make it clearer for those who are not tax professionals. It said it was "determined to make guidance accessible to the whole of the charities community, from volunteers to professionals".
This is all well and good, but I would like to suggest that HMRC start its improvements by speaking to HM Treasury. There are several issues I'd like to take up with them.
First, even the simplest Gift Aid guidance is difficult for many to understand. I regularly meet intelligent people who think that charities receive more Gift Aid tax credits if the donor is a 40 per cent taxpayer.
Second, charities still have to set up trading companies if their trading income exceeds £50k in the main charity. It was easier for the drafters of the Charities Act 2006 to increase the trading limit than to actually tackle the more difficult task of rewriting the tax statute. If you really want to reduce the administrative burden of charities, then please start here.
And last, please sort out payroll giving. This has never been the success we all would have liked and I am convinced it's because the majority of people don't understand their payslip. Then there's the fact that some agencies deduct their administration fee from the employer and others take it from the charity. In the end, it is all just too confusing for donors.