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22 October 2019 | Comment | Article by Roman Kubiak TEP

Charity tax reform – we are no closer


We’ve been following the Charity Tax commission’s report and summarised the key findings back in a blog in July 2019. Charity tax treatment has not been reviewed, in any detail, for over 20 years. Now would therefore be an appropriate time for the government to take action.

Unfortunately, it seems as if the sector is no closer to the suggested root and branch reform, required to bring the taxation of charities into the 21st century and further their charitable aims. In response to a written question about the merits of reforming Gift Aid, on 9 September 2019 Simon Clarke MP, the Exchequer Secretary to the Treasury accepted that charities are a vital part of society. He further noted that Gift Aid is one of the most generous tax reliefs, worth £1.3billion per year to charities. However, “the Government has made no assessment of the merits of reforming Gift Aid…” and further added that the government has no plans to undertake a formal comprehensive review of charity taxation.

While the proposal to exempt the cost for writing wills that include a charitable donation from VAT has been rejected, there is a possibility that this discreet issue may be reviewed.

Given the current political climate, it is hardly surprising that this issue has not been considered in any more depth. This, though, is unlikely to quell charity practitioners’ disappointment and frustration. It would be understandable if practitioners sought to lobby or campaign on this point.

Helpfully, on 13 September 2019, the Charity Commission’s CEO, Helen Stephenson, posted an informative blog to remind charities of their responsibility on political activities. Given the growing expectation of an imminent general election before the end of the year, charities have been invited to review the guidance. Naturally charities are able, and encouraged, to engage in political debate in order to represent their beneficiaries or provide their expertise. However, if they take a position on one side of the political side for no justifiable reason, the warning is that they risk undermining public confidence in their charity.

Given the increasing polarisation of views, highlighted no more so than the recent fiery exchanges in parliament, a fine line plainly needs to be struck by charities on this point.

Find more information on our Charities team. Or if you want to discuss any issues raised in this article contact us today.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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