Stewardship backs campaign demanding that the Government reconsiders controversial plans to cap tax relief on charitable giving.
UPDATE - 23/05/2012
The national media picked up on the announcement in the Budget of a proposed cap on tax relief for charitable giving. Stewardship has been working hard behind the scenes to evaluate the likely cost of the proposal and its impact on the sector, while also providing commentary to the national and sector press. Analysis reveals the likely impact on philanthropy and the economic effects are complex but are likely to be negative for both the sector and the Exchequer.
One thing is clear: this measure will impact small and large charities alike – and small as well as large donations to those charities.
Having met with HMRC officials, the Treasury and with David Gauke, the Exchequer Secretary to the Treasury, our team are now in the process of drawing up a comprehensive Briefing Paper. The intention of the Paper will be to inform Christians of the issues, so that intelligent responses can be given to the Public Consultation promised by the Coalition Government for this Summer. Watch out for a special edition of ‘Legal Eagle’ announcing the new Paper.
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.
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.
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:
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 [email protected]
blogs by the Stewardship team and selected guest writers.