Institute Calls For Reinstatement of £70 million In Lost Gift Aid Income
Howard Lake | 4 May 2007 | Newswire
The Institute of Fundraising (‘Institute’) is calling for HMRC to reinstate £70 million in lost Gift Aid income to the voluntary sector from April 2008, following the Chancellor of the Exchequer’s proposed reduction in the basic rate of income tax from 22 to 20%.
Making a detailed justification in a letter addressed to the Chancellor, the Institute believes that it was not the Government’s intention to penalise UK charities by reducing the basic-rate of income tax, but that the loss of over £70 million to charity in the 2008-09 tax year is an indirect consequence of the recent Budget changes.
Gift Aid is a rebate, and the system is underpinned by the principle that a donor declares they pay more tax than the charity subsequently claims. As a fundamental basis of Gift Aid, this self-declaration can be maintained yet still allowing Government to reverse the decision to remove at least £70million from charities.
The Institute contends that Gift Aid should be uncoupled from the basic-rate of tax, to allow charities to claim 28 pence in the pound from eligible donations.
Furthermore, this principle has precedent in the current Gift Aid system, where marginal (‘starting-rate’) taxpayers are able to Gift Aid their donations at the same level as basic and higher-rate taxpayers, provided they have made sufficient tax payments to cover the reclaim.
Lindsay Boswell, Chief Executive of the Institute of Fundraising states:
There is no rational reason for HMRC to turn down these proposed changes. Reversing the consequence of a spending decision offered to basic-rate tax-payers which has impacted indirectly on tax rebate in the voluntary sector, they absolutely sit within the current parameters of the Gift Aid system.â€
The proposed cut in the basic rate of income tax on income from Gift Aid has dire consequences for the income and expenditure of any fundraising charity. We continue to work with Government to maximise the potential of Gift Aid to our sector, and will raise these issues with HM Treasury, HM Revenue and Customs and the Office of the Third Sector on behalf of our members on 9th May. The Institute of Fundraising is home to a comprehensive tax-effective giving programme, training over 1,000 fundraisers in the technique and supplying materials to 11,000 fundraisers.â€
-ENDS-
MEDIA ENQUIRIES
For further information please contact:
Diana Mackie Tel. 020 7840 1027 / (07793) 803721
Institute of Fundraising email:
di****@in**********************.uk
NOTES TO EDITORS
1. Institute of Fundraising
The Institute of Fundraising (www.institute-of-fundraising.org.uk) represents fundraisers and fundraising throughout the UK and is committed to the highest standards in fundraising management and practice. The Institute of Fundraising is the largest individual representative body in the voluntary sector with 4350 Individual members and 250 Organisational members.
2. Chapter 10 of HMRC’s Detailed Guidance Notes to Charities on Gfit Aid:
3.9.1
From 6 April 2000, donors no longer need to pay income tax at the basic rate equal to the tax reclaimed by the charity on their donations. Instead, donors have to pay an amount of income tax and/or capital gains tax, whether at the basic rate or some other rate, equal to the tax deducted from their donations. This means that donors who previously may have paid tax at a marginal rate between the lower and basic rates of tax (and therefore had not paid enough tax at the basic rate to cover the tax reclaimed by the charity) will no longer have additional tax to pay.â€
http://www.hmrc.gov.uk/charities/chapter_3.pdf
3. Institute of Fundraising Policy Forum: What is the future of Gift Aid?
The members only event will be held at Royal Overseas League, St James’s Street, London SW1A 1LR on Wednesday 9th May 2007, 1-4pm. For further information about membership of the Institute please visit www.institute-of-fundraising.org.uk or call the membership team on 020 7840 1010. For a press pass to the event, please contact the Institute of Fundraising press office on
pr***@in**********************.uk
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About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.