Monday, 16 April 2012

tax relief on charitable giving

Updated Monday afternoon

In addition to the extension of to VAT to alterations to listed buildings in the budget, the Chancellor of the Exchequer also put a limit on the tax relief that higher-rate tax payers can claim on donations to charities.

James Kirkup and Tim Ross reported in The Telegraph this weekend that George Osborne’s charity tax plan is unfair, says Church of England. This article quotes remarks from “the chief finance officer of the Church [Commissioners]” which were made as a comment to an article by Tania Mason for Civil Society Media: Osborne provides evidence of aggressive tax avoidance to justify tax relief cap.

The weekend papers have published a number of other articles about this limit.

The Guardian
Dalya Alberge and Daniel Boffey Nick Clegg to go on charm offensive amid fury over charity tax cap
Press Association Charity tax relief cap: Tory treasurer adds voice to criticism
Marina McIntyre Charity tax relief plans attacked by philanthropists
Patrick Wintour and Hélène Mulholland Ministers look at measures to protect charities from tax changes

The Telegraph
Roya Nikkhah, Julie Henry and Robert Watts Charity tax relief cap under fire as philanthropists warn of funding crisis
Patrick Hennessy, Robert Watts and Roya Nikkhah Ministers sound retreat in charity tax row
Charity tax row: Government will ‘find solution’, says William Hague

Mail Online
Rob Cooper Tory treasurer turns on George Osborne in revolt over plans to cut tax relief on charitable donations

Explanatory note: In the UK those who pay income tax can gift-aid their donations to charity, and the charity can claim back the income tax that has been paid at the standard rate (which is 20%). So for every 80p of donation, the charity can claim 20p (ie 25% of the donation) from the taxman. For those who pay income tax at a higher rate, the charity can still claim 25% of the donation, and the taxpayer can claim the difference between this and the actual tax paid. It is this last amount the budget will cap.

There is an e-petition to HM Government opposing the Chancellor’s proposal.
Patrick Wintour reports in The Guardian that Charity tax plans to be reviewed.

Posted by Peter Owen on Monday, 16 April 2012 at 10:15am BST | TrackBack
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Categorised as: Church of England | News

The only virtue of this proposal is simplicity. There is no basis for lumping relief for giving with interest relief, relief for losses on unquoted share subscriptions etc. These should be dealt with separately and then the residual reliefs may need restricting. There is a case for restricting income tax relief for gifts which have effectively been made from capital. This could be dealt with by a higher but still arbitrary limit. Say 50%?

Posted by: David on Tuesday, 17 April 2012 at 1:30pm BST
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