Radical plan to simplify Gift Aid

A coalition of sector umbrella bodies has announced that its central proposal to the Government's Gift Aid consultation will be the introduction of a fixed tax reclaim rate for each charity, based on the proportion of voluntary income it receives.

Representatives of the Charity Tax Group, Acevo, the NCVO, the Institute of Fundraising, the Charity Finance Directors’ Group and the National Church Institutions told a press briefing on Friday that their suggestion would simplify the complex audit trail necessary for reclaiming Gift Aid and increase the sector’s revenue through charitable tax relief by £400m each year.

Under the new scheme, charities would avoid the laborious process of persuading donors to fill in Gift Aid forms and collecting the completed receipts, listing their donations and submitting all the information for auditing.

Instead, each organisation could agree a fixed rate of reclaim with HM Revenue & Customs on the basis of how much voluntary income it receives each year, as listed in its annual accounts.

The group added that changes could be made to the Statement of Recommended Practice if necessary to ensure that this information was a mandatory part of every charity’s accounting requirements.

“It has been very clear from all the meetings we have been holding that the sector is looking for something that simplifies the administrative process,” said Helen Donoghue, director of the CTG. “This message has come out very strongly.”

Lindsay Boswell, chief executive of the Institute of Fundraising, said the six umbrella bodies were united behind the idea and were confident it would be taken seriously by the Treasury.

“We would not have got consensus unless this was a viable and realistic proposal,” he said.

The six organisations are due to submit separate recommendations to the Treasury, but have all pledged to highlight the fixed-rate plan as a joint central request.

Addressing the issue of the drop in Gift Aid revenue as a result of the cut in the basic rate of income tax, due to come into force next April, the group said they would all ask the Government to maintain Gift Aid at the current rate over a transition period of up to four years.

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