Lords vote against total immunity from land tax

The House of Lords has voted down a proposal to give charities immunity from a new land tax - but granted exemptions to all developments that have a charitable purpose.

Charities that get planning permission on land they intend to sell, rather than develop for charitable use, will have to pay the community infrastructure levy, which is being introduced as part of the Planning Bill.

Campaigners said the decision set a worrying precedent.

"I thought there was a single concordat across the political divide that charities were not taxed," said Lord Phillips, a Liberal Democrat peer who campaigned for total exemption. "That concordat has been broken.

"Selling land for profit is no different from using it for charitable purposes, because by law all profits from the sale of that land must go exclusively to charitable purposes.

"If a charity sells shares, it doesn't pay tax. Why is it different for land?"

He said charities would be forced to waste "untold time and effort" understanding how the new levy worked. "We will waste months arguing with local councils," he said.

Helen Donoghue, chief executive of the Charity Tax Group, said the Government had promised to work with her organisation to establish further exemptions.

"It was a major victory to get as far as we did because the Government did not want any exemptions at all," she said. "It wanted to deal with it all through secondary legislation.

"It has shifted the language of the exemption to say that there is a presumption of exemption except in specific circumstances."

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