Increase Gift Aid amount and protect charity business rate relief, government urged

Two major charity finance bodies have reiterated calls for the government to temporarily increase the rate of Gift Aid and protect charity business rate relief in the upcoming Budget.

The Charity Tax Group and the Charity Finance Group have submitted budget representations to the government that they believe would lead to a simpler and fairer tax system for charities.

It follows a call in June last year by a coalition of major charities and umbrella bodies that urged the government to temporarily increase the rate of Gift Aid not-for-profit organisations can claim in an attempt to provide a £450m boost to the sector’s finances.

The latest submission highlights five core tax policy issues that charities face, calls on the government to consider introducing a special VAT rate of 10 per cent for charity purchases, and urges the Treasury to protect charity business rates relief in England as part of an ongoing review. 

In addition, the submission calls for the government to bring forward a review of advertising and the associated tax treatment for charities and extend the zero VAT rate to social media advertising.

It also wants the government to agree to an extension of the nine-month time limit for Gift Aid payments from trading subsidiaries to parent charities, because of the impact of Covid-19.

Pandemic-related support measures, such as the Coronavirus Job Retention Scheme, the temporary five per cent VAT rate on hospitality, hotel and holiday accommodation and admissions to certain attractions have helped many charities, and should be continued where possible while lockdown restrictions continue, the submission says. 

In a statement on its website, the CTG said: “As a minimum, existing charity tax reliefs should be protected and tax compliance and administration simplified.

“In particular, we call on the government to design a tax system in the light of Covid-19 and Brexit that maximises the valuable impact of charities (seen so clearly during the pandemic) and does not undermine it.”

The full budget submission can be accessed here.

The Budget is due to take place on 3 March. 

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