Pensioner tax hike might reduce charitable donations, Institute of Fundraising warns

Older people usually give most to charity but were the biggest losers in last week's Budget

Institute of Fundraising, London
Institute of Fundraising, London

Tax rises for pensioners could hit charitable donations, the Institute of Fundraising has warned.

The move in last week’s Budget to freeze tax allowances for the over 65s, which government figures show will cost them an estimated £3.3bn by 2016/17, could lead to one of society’s most generous groups cutting their donations, the IoF said.

A recent survey by the IoF found that 77 per cent of over 55s had donated to charity in the past three months compared with 46 per cent of 18- to 24-year-olds. But 53 per cent of over 55s said they were already giving all they could afford. The survey of 1,999 people was conducted in January and February so does not take the impact of the Budget into account.

An IoF spokesman said: "This is now an age group that will become progressively more squeezed – and there is a risk they will reduce their donations to charities if they feel they can no longer afford it."

The freeze on tax-free personal allowances for pensioners, which starts in April 2013, will cost those on middle incomes about £4 a week, according to the older people’s organisation Saga. The so-called "granny tax" affects pensioners with incomes of between £10,000 and £24,000 a year; the very poorest and wealthiest are not affected because those earning more than £24,000 never received the enhanced allowance.

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