The Charity Tax Group has backed changes to benefits that charities can give to donors whilst still claiming Gift Aid.
Formed in 1982 to make suggestions to the Government regarding charity taxation issues, the Charity Tax Group has since become the sector’s leading voice on the issue. The call for simpler Gift Aid rules is a part of the body’s commitment to make charity tax more straightforward.
The Initial Problem
Last year, HM Revenue & Customs consulted with the Treasury on Gift Aid benefit rules and how much benefit donors can receive from charities before these donations are no longer eligible for tax relief.
Despite three potential solutions being put forward, none were considered as suitable options by the Charity Tax Group.
The Proposed Solution
The Charity Tax Group has backed the proposal that donors could be eligible to receive benefits worth up to 25% of any donation up to £100. If a donation is worth more than £100, donors could receive a quarter of the first £100 plus 5% of the rest of the sum. The maximum benefit threshold would be £2,500.
Originally, the Government proposed a more radical approach to the Gift Aid regulations where the link between donor benefits and individuals was removed and rather applied to the total benefit value the charity provides.
We can expect a more in-depth consultation on this in the coming future.
Simplifying the tax rules could help charities manage donor benefits in an efficient way whilst maintaining their Gift Aid income which is a lucrative revenue stream.
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