Increase Gift Aid rate after VAT cut for hospitality sector, government urged

The move comes on the day the Chancellor announced a temporary reduction in the rate of VAT on various commodities

The Charities Aid Foundation has reiterated calls for the government to increase the rate of Gift Aid that charities can claim after the Chancellor announced a VAT cut for the tourism and hospitality industries. 

Rishi Sunak today announced a six-month reduction from 20 per cent to 5 per cent in the rate of VAT on food, accommodation and attractions in a bid to help industries that have been severely affected by the coronavirus outbreak. 

In his economic update before parliament today, Sunak also announced that the government would pay companies a £1,000 bonus for every staff member returning from furlough who is retained for three months from when the government’s furlough scheme ends in October.

Government figures showed last month that 164,000 people in the voluntary sector had been furloughed, so the scheme could be worth £164m to the sector if all of those jobs are protected until January. 

CAF led a group of voluntary sector organisations that last month asked the government to increase the rate of Gift Aid charities receive from 25 per cent to 33 per cent over the next two years in a bid to provide a £450m boost to the sector’s finances.

Speaking after Sunak’s speech today, Sir John Low, chief executive of CAF, reiterated calls for a temporary increase in the rate of Gift Aid. 

“The Chancellor has laid out several positive measures to help people, especially young workers, to weather the effects of the pandemic,” he said. 

“We continue to urge the Treasury to consider the proposal to increase Gift Aid so that charities can play their part in rebuilding our economy.

“Just as we need the hospitality sector to survive, people across the UK need charities to still be there as we emerge from this crisis.

“Charities are integral to the UK’s recovery and are at the heart of our communities. Indeed, together they currently employ more than 900,000 people in the UK.”

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