Charity Tax Group still hopeful for accounts-based Gift Aid

Members of the charity coalition advocating an accounts-based system for Gift Aid are still hoping that it will receive sympathetic consideration in future, despite the fact that it was not mentioned in the Chancellor's Budget statement.

Instead, Alistair Darling announced that charities would be allowed to continue to claim Gift Aid at effectively 28 pence for every pound donated for the next three years, rather than the level dropping to 25 pence in line with the falling income tax rate.

Charities welcomed the announcement, which came in the wake of a lengthy Treasury review of Gift Aid. But the Tories dismissed the Gift Aid review as a flop and said the transitional relief would “only last three years”.

Accounts-based system 'could still be adopted'

Helen Donoghue, director of the Charity Tax Group, said the group was delighted the Chancellor had recognised the importance of supporting charities by offering transitional relief and that the accounts-based proposal could still be adopted.

“This transitional relief gives the Government sufficient time to look at the Gift Aid system as a whole and the positive proposals put forward by the sector to simplify and modernise this important relief and improve take-up of it,” she said.

Megan Pacey, director of policy and campaigns at the Institute of Fundraising, echoed Donoghue’s views. “We’re particularly pleased with the announcement of training for small charities in how to make Gift Aid work and the online mentoring forum,” she said.

What next?

Pacey sounded a warning note, however. “We need to make sure as a sector that we’re not back in the same position in three years’ time,” she said. “We need to speak to government and work out what we will do when this relief ends.”

Louisa Darian, policy officer at umbrella body the NCVO, confirmed that Gift Aid had been the sector’s key victory. “We need to maintain a dialogue with government to make the system as easy to use as possible,” she said.

John Low, chief executive of the Charities Aid Foundation, which has always been opposed to the accounts-based system, said he was delighted with the Budget outcome. “The extension of the 22 per cent rate for three years is really good news because it will allow charities to plan.”

The Charity Finance Directors' Group welcomed transitional relief. "We know that 88 per cent of our members who responded to a survey last year supported transitional relief," said chief executive Keith Hickey. "We are pleased that the Government is continuing to work with the sector on a more detailed proposal on Gift Aid and we are looking forward to working with them on that."

Review a ‘flop’

Greg Clark, the shadow charities minister, said: “The promised Gift Aid review has turned out to be a flop. There’s the odd welcome tweak to the administration of Gift Aid, but hopes for measures that would significantly increase take-up have been dashed.”
Clark also criticised the lack of a boost to the take-up of Gift Aid from higher-rate taxpayers.

More work to be done

Cabinet Office Minister Ed Miliband said the Government would continue to work with the sector. “In the years ahead, we will continue to work with the sector to seek to further improve the way Gift Aid can support the sector,” he said.

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