Budget falls short on Gift Aid and VAT reform

Charity VAT measures go unmentioned in Budget

Reform of Gift Aid and VAT were at the top of many wish lists for this year's budget, but charities have been left disappointed.

Helen Donoghue, director of the Charity Tax Group, said that she was "disappointed but not surprised" that several charity VAT measures had not been mentioned in Budget support documents.

"These reforms could still go ahead, but it would have been good to have had some mention of them now," she said.

"We're still hopeful about a number of negotiations with the Treasury."

Donoghue said she was also disappointed that no mention had been made of an opt-out system for Gift Aid, which would assume donors consented unless they said otherwise.

She said that the sector was "working beneath a ticking clock" on Gift Aid reform because a solution had to be reached before the end of transitional relief in two years' time.

Ernese Skinner, policy and campaigns manager at the Charity Finance Directors' Group, said that she was disappointed the Government had not delayed the removal of the staff hire concession, which grants employers VAT relief on wages paid to temporary workers.

The measure is expected to affect large numbers of health and social care charities.

"This is a measure that penalises employers trying to get people into work, which doesn't seem sensible at this time," she said.

Skinner said she was also disappointed that the Government had not made an announcement on water rates for charities and sports clubs after a new system of charges increased rates many times over for some organisations.

There was also no word from the Government about compensation for charities involved in the Icelandic banking crisis.

"I'm disappointed that they didn't take up our proposal to lend money to charities involved in the crisis," said John Low, chief executive of the Charities Aid Foundation, who has lobbied for charities to receive their money back.

"However I am not too surprised after positive messages came from the administrators about how much money they expect to be able to return."

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