NCVO setting up body to review the charity tax system

A letter from Sir Stuart Etherington, chief executive of the umbrella body, to the Chancellor ahead of next week's Budget also calls for a number of other measures to help charities

NCVO: letter to Philip Hammond
NCVO: letter to Philip Hammond

The National Council for Voluntary Organisations is setting up a high-level body to carry out a full review of the charity tax system, according to a letter from Sir Stuart Etherington, chief executive of the NCVO, to the Chancellor of the Exchequer.

In the letter, which was sent today to Philip Hammond, the Chancellor, Rob Wilson, the Minister for Civil Society, and Jane Ellison, Financial Secretary to the Treasury, Etherington says the review will develop recommendations that will "establish a long-term framework for charity tax reliefs".

A spokesman for the NCVO said he hoped the review, the first such exercise since 1997, would have cross-party political representation and a high-level board with senior experience in government and economics.

The last review, which was government-run and reported its findings in 1999 , recommended a number of reforms to the charity tax system, such as further VAT exemptions.

The letter says the increasing role of charities in society means "it has become more necessary than ever before to carefully appraise how wider fiscal policies may impact on sector organisations".

It says: "To take the example of village halls or community centres, the cost of insurance will often be one of their greatest sources of expenditure, and the rise in insurance premium tax is likely to disproportionately affect their work. The national living wage, apprenticeship levy and business rates revaluation have similarly affected many charities.

"Many voluntary organisations are now telling us that the cumulative impact of these individual policies has put at risk the business model on which they operate. While they welcome the aspirations and aims of policies such as the national living wage, they are increasingly concerned about how they will maintain their viability, particularly in relation to the delivery of services under contract."

The letter, which was sent before next week’s Budget, also calls for a number of other measures to help the charity sector, including incentivising volunteering and giving, and enabling voluntary organisations to become more involved in delivering public services.

The letter calls on the government to consider charity sector proposals on community asset ownership, reconsider how the Libor fines from banks are distributed to the charity sector and measure the cumulative impact of tax system changes on charities through the HRMC-run Charities Tax Forum.

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