give it back George!

Stewardship backs campaign demanding that the Government reconsiders controversial plans to cap tax relief on charitable giving.

Stewardship has signed up to the giveitbackgeorge campaign to ask the government to make a U-turn on its proposal to a cap on big charitable donations.

We urge readers to find out about the issues, the threat to charities’ income as a result of the introduction of a cap and to support the campaign, both as individuals and organisations.

What is it all about?

If the recent Budget announcement goes ahead, as of April 2013, relief will be limited to the tax on £50,000 of charitable giving, or a quarter of the donor’s income, whichever is greater.

Under current rules, taxpayers can claim tax relief on the income from which they make charitable donations. For basic rate taxpayers, the relief is claimed by the charity. For higher rate taxpayers, they can personally reclaim the difference between the tax they pay and the basic rate claimed by the charity.

Why does this matter?

Within the church, and the faith sector in general, personal levels of giving are much higher than amongst charities in general. Many donors give quietly and sacrificially and some donors even work out how much they need to live on, and from their very significant income, choose to give the rest away to charity.

In a survey conducted by CAF, nine out of ten top charity executives said that the planned cap would hit donations hard and revealed that Britain’s richest seven per cent were responsible for almost half of their total donations received last year. The latest Sunday Times Giving List also reports that the top 100 donors gave a total of £1.67 billion out of the UK’s £11 billion annual giving total.

Because major donors give very intentionally, a withdrawal of tax relief will mean not only less tax relief to charities, but a reduction in the actual gifts that come to charity.

Our preliminary calculations suggest that this reduction could mean 30% less giving coming into the charity sector, including churches. And that is before any tax relief is given.

This measure is not about tax avoidance, or fraud on charitable gifts, nor is it about charities not operating for the good of society. And it is not really a bid to stop the rich from using charitable donations to cut their tax bills because the Government’s own estimates of the resultant savings are just too small.

Our hope is that this measure was a last minute, ill-conceived addition to a budget designed to demonstrate to the public that the government is prepared to be tough with those it believes should be paying taxes, but are able to use the assortment of tax reliefs available to reduce this obligation to well below the basic rate.

In so doing, tax reliefs available to those giving most generously and sacrificially have been innocently swept up in the process.

Stewardship’s response

In engaging with major donors over the last few weeks, we have been struck by the humble approach of these people; by their compassion and love for their neighbour, and their clear motivation, far from obtaining tax relief, is to personally contribute to making society a better place to live in. But, they are sadly reflecting that the cap will inevitably mean that they will have to reduce their giving from next year.

One donor indicated that they would emigrate, with their family, to enable them to restore their philanthropic objectives. Others may hold back from making larger gifts until more favourable measures are in place, or throttle back their giving during their lifetime and instead leave a larger legacy many years in the future.  If this is repeated by others, the Government will lose more than their support for society; they will lose tax revenues from whole families that would otherwise have continued in the years to come.

Stewardship is keeping the pressure up to see this measure removed. We are engaging with HM Revenue & Customs, with HM Treasury and with Treasury Ministers directly to help represent the voice of Christian giving in the UK, where we know sacrificial giving is most prevalent.

Concluding thoughts

The UK has long been recognised as one of the most generous in the world. However, if George Osborne’s changes take effect in April 2013 it will not be the rich who suffer, but the poorest in society.

Please join us in seeing this proposal defeated before it is too late:

• If you are personally impacted by the proposal, please consider sharing your thoughts with us, on a confidential basis.
• Sign up to the giveitbackgeorge campaign
• Respond to the Government’s Public Consultation, due to be published in the summer. Most consultations have a three month response period.
• Keep checking back to the Stewardship website as we will add more resources and informed comment ahead of the Government’s Public Consultation on the proposal. And please, please respond to the Consultation once it has been published. The Government need to understand the damage that a cap will do to the charity sector.

For more information…

General enquiries, please contact Bethan Walker on 020 8418 8167.

Individuals who are directly affected by this proposal, please contact Kevin Russell, Technical Director via kevin.russell@stewardship.org.uk.

help us fight the charity tax relief cap proposal

The Government proposes, from April 2013, to restrict the tax relief for charitable gifts – whether under gift aid, payroll giving, or gifts of shares, and land and property. Whilst this will not impact on most donors, major and sacrificial giving will be impacted. Anyone who gives a gift aid gift or gifts in a year of over £40,000 may see their tax relief restricted, and may even find that they have to pay HMRC for the privilege.

If you do personally make large gifts to charity that could be affected, would you be prepared to help us resist this measure? We need evidence of the potential impact to take to HMRC and the Treasury. If you would be prepared to speak to us about your personal experience, send an e mail to Kevin.Russell@stewardship.org.uk with a contact telephone number. Anonymity can be protected where requested.

image courtesy of www.giveitbackgeorge.org

risk assessment - it's why you became a trustee!

• Strategic and leadership
• Employment
• Legal and governance
• Financial
• Insurance
• Communication and publicity
• Children and youth
• Buildings and property
• Counselling and pastoral
• Catering
• Data protection

The tool can be purchased either in its “stand alone” form or in association with a half-day or full day visit from a Stewardship consultant.  A specially discounted rate is offered for churches making contact before 30 June 2012, wishing to arrange a visit sometime during the year.   Please contact Alan Hough on 0208 418 8166 or email alan.hough@stewardship.org.uk if you are interested in any of the packages offered.

Inclusive of VAT at 20%.

¹ – Members of Stewardship’s consultancy helpline

² – Travel costs will be added (either public transport or applying the HMRC business mileage rate – currently 45p per mile)

Viewed in the right light, risk management can be very beneficial and quite liberating to a church even if it is still not the reason that you became a trustee.

To find out more about our Risk Assessment Toolkit, visit our consultancy services web page .

faithful in the little things

If you are faithful in little things, you will be faithful in large ones; Luke 16:10a (NLT).

This is really another article about Internal Controls written by a former auditor with experience as a Charity Commission investigator; I want to emphasise how important it is that those “little things” are done well.

Little things, like counter-signing cheques after they have been signed (rather than signing blanks in advance), using bank mandates that are up-to-date and properly implemented, ensuring where possible that the division of duties are appropriate or there is adequate supervision, completing Annual Returns properly, making sure that accounts are submitted on time, being seen to be accountable, declaring personal interests in transactions, keeping proper minutes of the trustee or board meetings and ensuring that conflicts of interest are properly managed by absenting those who are conflicted etc. etc. Oh, I know (yawn) that these little things are not very exciting!

However, If these little things are not done well (or at all) it can lead to a general slackness and a weakening of the organisation’s culture potentially resulting in irreparable damage to (particularly the reputation of) a charity. Imagine how difficult it is to seek to restore a damaged reputation or continue to govern a charity where there are serious allegations, perhaps with high profile media interest, resulting in the suspension by donors of much needed funds and the presence and involvement of outside investigators while you try to do the day job.

I know that such disasters are often caused by serious (even criminal) misconduct, rather than a mislaid cheque book here or there, but even in minor investigation situations where a charity is not found to have been “faithful in the little things” the trustees may experience tremendous difficulty in clearing their names, and restoring reputations, when things do apparently go wrong.

For example, getting the accounts and returns in on time is a small thing but it goes a long way to showing how well your church or charity is being run. Failure to submit accounts (at all or on time) or the submission of poor quality accounts is a strong indicator of (possibly major) risk to outsiders (including the Charity Commission) because it is a symptom of poor governance. If these little things are not attended to, what else might be going wrong?

Can I draw your attention to two publications? Stewardship’s Briefing Paper “Financial controls in churches and small charities” (June 2009) explains how to do all of those little things well. On the other hand, the fourth edition of the Charity Commission's annual summary of issues arising from its investigatory work, "Charities Back on Track" (September 2011) was recently published. It gives some examples that illustrate the breadth of serious issues that were investigated, at some considerable cost to the taxpayer, during the financial year 2010-11.

review of charity law

They can be accessed from here.

changes to the PAYE system - Real Time Information

Payroll procedures are changing! From April next year, employers and pension providers will need to provide ‘Real Time Information’ online, to HMRC. Submissions will provide HMRC with tax, national insurance and other payroll deductions for each employee, together with changes to the payroll (starters, leavers), every time the payroll is run.

Additional information will also be required to support the new Universal Credits system such as the number of hours a person is expected to, or regularly works in a week.

HMRC have prepared some employer FAQ’s which can be viewed here.

Did you know? Stewardship run an excellent Payroll Bureau service which is significantly more comprehensive than most commercial bureaus and tailored specifically to Christian charities and churches. For details click here

energy supplies - are you being overcharged?

A recent survey calculated that charities paid £78m of unnecessary tax on their energy bills in 2011. A staggering 46% of charities surveyed didn’t realise they only have to pay 5% VAT on their energy costs.

Energy suppliers do not apply the 5% rate automatically. Charities must send them a certificate to claim this. It is, however, possible to make a retrospective claim for up to 4 years for VAT overpaid.

Our Briefing Paper ‘VAT for Churches – a detailed guide’ covers the rules for energy supplies in more detail as well as setting out further potential cost savings for churches. To obtain your copy, priced £19.50, visit www.stewardship.org.uk/vat.

copyright licensing - sound recordings at church

Churches should note, if they have not already done so, that the law on copyright licensing changed with effect from 1 January 2012. Any church that plays sound recordings, or has groups (for example a youth group, or coffee morning) that use their premises during the week and who play sound recordings, must, by law, purchase a Phonographic Performance Ltd (PPL) Church Licence. This follows a 12 month period of grace from the new laws introduced for others from 2011.

If the only recorded music played by the church is during an act of divine worship, the church is  exempt from the new rules.

The cost of the licence is determined by the average aggregated number of people in the congregation at your main service, and varies from £21.68 through to £180.64 for churches with over 500 but less than 1,000 people. Larger churches will pay more.

Note: churches now need both a Performing Rights Society (PRS) for Music Church Licence and a new PPL Church Licence in order to play sound recordings. Both Licenses can be obtained from Churches Copyright Licensing International  (CCLI).

More information can be found here

HMRC revise wording for Gift Aid Declarations

HMRC has recently updated its guidance on Gift Aid Declarations. Three new model forms are provided. These change the ‘tax to cover’ wording and make it clear that taxes such as VAT and council tax do not qualify. The new ‘tax to cover’ wording should be used as soon as possible and for all new declarations and replacements for enduring declarations by 31 December 2012.

Charities do not need to pro-actively seek replacement declarations for those that are already in place.

HMRC has also corrected previous guidance to make it clear that declarations must be retained for six, rather than four years. Charities will not be penalised, if before 1 January 2012, they destroyed declarations relating to donations more than four years but less than six years previous.

Further details can be found here and here.

church events - the legal requirements

Churches up and down the UK run many thousands of events every year. If you're an event organiser, did you realise that there are legal considerations to take into account?

The Churches Legislation Advisory Service (CLAS) has just produced a very helpful free 9-page checklist,  covering various legal requirements and matters that need to considered when a church plans an event. It includes considerations such as Safeguarding, Health and Safety, Insurance, Food Safety, Alcohol Licenses, and more.

Stewardship works closely with the Churches Legislation Advisory Service. They are an ecumenical membership organisation that seeks to communicate with and influence Government on legislation  and other matters which directly affect churches, and to act as a channel through which Government can consult the churches as a whole. They also comment on the impact of proposed legislation, as well as acting on churches/church ministers’ behalves to seek to cure anomalies and bring about a regime that is as fair as possible. To find out more about membership of CLAS, click here.

To obtain your copy of the Occasional Events checklist, visit the CLAS website and select the ‘Publications’ tab. From there, you can download the document.