By a Newsnet reporter
The SNP are backing the call from more than 800 charities for the Chancellor George Osborne to take action to amend the flawed budget. The charities are concerned that plans to cap tax relief on donations will have a damaging effect on their income.
£11 billion was given to charity last year, with almost half of this coming from just 7% of donors. Many of these gifts are used to set up grant-making trusts and foundations that support small charities.
Voluntary organisations and charities are worried that the UK government’s cap on the tax reliefs available to philanthropists will increase the cost of giving to charity and reduce the amount available to the voluntary sector at a time when government grants are being sharply cut.
A policy briefing, added to the Treasury website last week, confirms charities’ worst fears about the £50,000 cap on tax relief on charitable donations announced in the Budget. The cap on income tax relief will limit relief to 25% of a donor’s income or £50,000, whichever is highest.
The Treasury document confirms that the cap on tax relief imposed on donors will include Gift Aid claimed by charities, in addition to the personal tax relief available to higher rate taxpayers. It also raises fears that charities will face months of uncertainty while Ministers consult on the changes.
The Government’s claim that there is a widespread problem with wealthy people funnelling cash to bogus charities as a means of avoiding tax was rejected by the Charity Commission. The Commission, which registers charities and investigates claims against them, said it had never been contacted by the Treasury about the issue.
A campaign against the tax changes has attracted more than 1,500 supporters including hundreds of charities as well as individuals and donors.
Sir Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations (NCVO), said: “This note only muddies the waters further. It reinforces our concern that this policy is half-baked at best. Major donors are facing at least six months of confusion and charities are already losing gifts as a result. The Treasury should act more quickly and drop the proposed cap on gift aid tax relief.”
John Low, Chief Executive of the Charities Aid Foundation, said:
“We knew the tax changes would be bad, but this confirms our worst fears. The Treasury talks as if Britain’s most generous charitable donors are simply tax avoiders.
“The Government’s handling of this has been shambolic. Far from clarifying matters, it has created further confusion among charities and donors. That’s no way to fulfil its vision of a Big Society.
“Treasury officials just have not recognised that there is a world of difference between giving your money away for the public good, and trying to offset tax for private gain.
“Charities are facing a tough economic climate in the face of deep cuts in public spending and a squeeze on incomes while tackling increased demand for their services. We need to be encouraging philanthropists to support charities, not treating them as if they are shirking their public duty.”
The SNP’s Treasury Spokesperson Stewart Hosie MP said:
“Things are going from bad to worse for the Chancellor as the budget continues to unravel.
“Following the tax on pasties and the tax on pensioners, it’s now some of the UK’s most respected charities which fear for their future after the impact of the Chancellor’s ill-thought out plans becomes clear.
“If the intention was to close a tax loophole, it’s a ham-fisted way to go about it. He is indirectly hitting the most vulnerable in society who rely on the services they provide.
“The Chancellor claims to have been ‘shocked’ that many millionaires don’t pay their fair share of tax – he has either been living on another planet, or sleeping on the job. If he is so shocked then of course he must close these loopholes – but hitting charities is surely not the way to go about it.
“The Chancellor has an opportunity next week to rethink this flawed budget and take action to boost growth and help those who are hurting most.”