Higher-rate taxpayers might give more to charity, expert predicts

Move could be used to qualify for child benefit

Gareth Morgan, professor of charity studies, Sheffield Hallam University
Gareth Morgan, professor of charity studies, Sheffield Hallam University

A voluntary sector expert has predicted that last week’s comprehensive spending review could result in more charity donations from higher-rate taxpayers.

Gareth Morgan, professor of charity studies at Sheffield Hallam University, said some people earning just inside the higher rate tax band of £44,000 to £50,000 might increase their Gift Aid contributions so they can continue to receive child benefit.

"The announcement that parents who pay higher-rate tax will lose child benefit creates a great opportunity for those just into the higher-rate band to give more to charity," Morgan wrote in the paper 2010 Spending Review – Implications For Charities.

"It has always been the case that people on higher-rate tax get an extra tax rebate on donations under Gift Aid. But if Gift Aid donations bring down their taxable income so it stays within the basic-rate band, they could keep the child benefit they would otherwise lose."

Morgan also predicted new grass-roots charities funded with little or no public sector income would emerge to address social needs brought about by the cuts.

But he warned that the cuts would lead to the demise of many charities, particularly those funded by local authorities.

"The future is dire for some charities, but the changes offer opportunities for others," said Morgan, who wrote the article for the York-based charity consultancy The Kubernesis Partnership, of which he is a senior partner.

To read the report, click here.

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