The Charity Tax Group (CTG) – which has over 500 members – has submitted its response to the Government’s Call for Evidence on the Gift Aid donor benefit rules.
CTG’s response follows a series of consultation exercises with its members including a seminar involving HMRC and HM Treasury officials at which over 50 charities and charity advisers were present. CTG Chairman John Hemming commented: “CTG welcomes the Government’s recognition of ‘the important role that the charities sector plays in our society’ and the financial support that it gives in the form of tax reliefs. Like the Government, CTG is keen to ensure that the Gift Aid donor benefit rules are easy to administer and are fully utilised and we have made a series of recommendations to help realise this goal.”
In its response, CTG recommends that the Government:
- continues its engagement with the sector and convene a meeting of Charity Tax Forum Gift Aid Donor Benefits sub-group before any proposals are progressed to a formal consultation
- commits to a serious review of the donor benefits guidance with the close involvement of charities and their charity advisers, with particular focus being given to the ‘in consequence’ rule. This review should also consider ways of improving accessibility to the guidance on Gov.UK
- ensures that donor benefit thresholds are easy to follow, fit for purpose and tackle the ‘cliff edge’ problem by replacing them with two bands
- allows all ‘unsolicited’ third party benefits to be disregarded, and also disregards ‘solicited’ third party benefits where the charity can demonstrate that a similar offer is available to other members of the general public
- legislates to maintain the four concessions outlined in the Call for Evidence, namely the split payment rule, the averaging method, the disregard allowing literature to be considered as of inconsequential value and the 10-year rule for a ‘life time’ benefit
- considers a change in the way benefits are valued from market value to cost value except in cases where there is a readily convertible cash equivalent
- considers removing the requirement that benefits must be available for purchase separately when using the split payment method
- consider introducing a disregard for benefits that further an organisation’s charitable objectives
- clarifies the circumstances in which the averaging method can be used
- commits to maintaining the admissions disregards and considers removing the current requirement for visitors to pay an additional 10%
- considers extending the admissions disregards to live performances where they are provided in accordance with an organisation’s charitable purposes
Charities looking at ways to develop and increase funding may find it helpful to discuss their options and financial issues with professional advisers that specialise in this area. For more information on how Milsted Langdon’s charities team can help, please contact us.