Spamcan81
Established Member
No obligation is imposed on others. If you choose to donate by gift aid then the money the charity receives is the tax that you have paid, not anyone else.
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Gift Aid changes could be ahead for charities, and are charities using money appropriately?
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But that means that the government has received less income from you, and, in order to fund the same amount of expenditure, taxes have to be higher elsewhere. In the end, it costs everyone.
Charitable giving is an allowable expense to an extent for businesses and sole traders too, so going back to the press gift aid position just reintroduces this lack of parity.
Sounds like you'd like to tax all donations in any form? Rather a large change of policy if so, and doubtless one that would face some very heavy resistance.
1. I've yet to meet anyone who has opted out of contributing to public services through Gift Aid - peoples' donations rarely touch the sides of what they pay in Income Tax and CGT.
2. It is drastically simpler than what preceded it, and government considers that allowing this proportion of tax to go to charities is a good investment.
3. A very good question, and this higher rate taxpayer would lose no sleep if that benefit were closed. However, as a Gift Aid administrator, what I see is that higher rate taxpayers do make extra donations that correlate to that tax relief.
Gift aid was introduced in 1990. The state of the UK public finances were very different then.
Charitable donations are not taxed. The donor is given a tax relief on their income, which they then also donate to the charity. Economically, it is a gift from the government to the charity, and an amount over which they have no control.
The question is whether, given the current state of the UK public finances, that is a sensible use of government resources.
Correct. So as I said you'd like them to be subject to tax in the usual way? Paid out of taxed funds?
Yorkshire09876
Member
The state of public finances has fluctuated a lot, as it always does, but has it escaped your notice just how much we are taxed? As individuals most of us pay PAYE (or equivalent if self-employed, etc), National Insurance, Council Tax, 20% VAT on the majority of non-essential purchases, Car tax, Fuel duty, alcohol tax, tax on savings interest, capital gains tax, inheritance tax.
I'm sure I will have forgotten some (and there are of course also the taxes levied on businesses), but given how much the government screws out of us I think they can afford to lose a small amount to Gift Aid. And as others have already pointed out, a good few of these charities are providing services which the government ought to be providing but isn't.
The cost of Gift Aid to the government is £1.6bn, out of a government spend of £1,226bn, or about 0.13%.
To put that in perspective that would be the same as someone having a take home pay of £35,000 and paying £46.
If things got that bad there would be a lot bigger pots to look at, for example the "tax gap" for large corporations if it was narrowed by 12% would cover it (clearly totally closing such tax gaps would be highly unlikely)
Of course it hasn't! To understand why, see below.
The 4 biggest revenue earners are Income Tax, National Insurance, Corporation Tax and VAT. Together they make up about three-quarters of the total. Manifesto and other commitments mean that these are "out of bounds" for further changes to the headline rates, and hence for raising significant amounts of additional revenue.
And that's why things that cost £1.6 billion now have to be scrutinised and justified.
That's in the past. The future is for continuing deterioration because of lack of economic growth and an aging and more sickly population.
As a result, there are lots of things that the government used to be able to afford, but can't afford any more.
Yorkshire09876
Member
Taxes have been lower in past times, and Government-provided services better. Despite tax on individuals being higher than it has been for decades, there is a pervading sense that nothing really works properly any more. And if the Governent slashed Gift Aid, it would quite likely lead to charities being able to do less,and the Government having to take up the slack in some of those areas - which might well cost them more than just leaving GA alone.
As always, the Government can afford to spend money on things they want to - overseas aid, military aid to Ukraine, vanity projects like HS2 (which everyone knows before work starts will go way over-budget, because that always happens), and meanwhile national institutions become more and more bloated with jobs which don't need to exist. e.g. EDI departments didn't exist a decade ago - it was just part of HR - but it's become a ballooning industry now.
And as regards economic growth, there has been a drive from UK Governments for decades to deindustrialise, and we now have some of the highest industrial energy prices in the world. It's scarcely surprising if we aren't seeing economic growth, given that the main growth areas are in non-jobs such as EDI and zero-carbon which produce nothing tangible. And all these alleged 'green jobs' which they talk about haven't materialised - what a surprise.
The problems with the country aren't that we are under taxed - it's down to decades of inept government, with no signs of this changing.
That was when the economy was growing, there were lots of people working and not many pensioners. Circumstances are different now.
The UK is under taxed for the level of services that the government are expected to provide. The cost of those services is increasing because there are more old people and more sick people, but, because there has been no economic growth since the 2008 crash, tax revenue has not increased except through higher taxes.
Since 2008, UK government has not "balanced the books", so debt has increased from 40% of GDP before 2008 to 100% of GDP now, and the interest bill is much higher.
This is sometimes summarised as the UK expecting European levels of public services while only paying American levels of tax.
There is a very big sign that this is changing, because it is now widely recognised that getting back to economic growth is the only way to get better public services without needing to raise tax rates.
This is the second government to attempt to get back to economic growth. Positive results from growth promoting policies don't yield benefits in a few months, though it is quite possible for the wrong policies to lead to disaster very quickly, as the first attempt demonstrated. I shall be judging how this government has done in 2028, not now.
The obligation imposed upon others is to make up that shortfall.
That would only be true if public funding weren't being subsidised by charity sector money as it is. For example the RNLI makes up a large part of its running costs from public donations. NHS Charities Together saves a significant amount of public money that'd end up being spent otherwise. They're just an example, they're far from the only cases. Sometimes the saving is more direct, such as debt and housing charities saving vast amounts of local authority money on supporting homeless people, or preventing them from getting into these situations in the first place. Drug charities prevent harm to health that's expensive to treat. Obviously some charity work would go unfounded entirely if there weren't any donations to support it, but realistically a lot of it is things that the public expects to be provided. At the end of the day the above is part of the rationale for allowing donations to be tax deductible. Also, gift aid is by its very nature limited to the amount of income tax you've paid. If that's £0 your donation is ineligible to for gift aid.
Imagine them and the lifeboats becoming political footballs though.
I’m just going to remind people to stay vaguely around the gift aid topic rather than the wider issue of taxes in general before the thread becomes too unwieldy.
That might be worth a separate thread if anyone wants to start one though.
That might be worth a separate thread if anyone wants to start one though.
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Just looked it up and was actually 2000/01 when books last balanced.
Just to make all those on here happy who don't like Gift Aid I've cancelled some of my charitable donations to cover some extra tax costs as something has had to give. So government will get its extra tax and won't lose anything in Gift Aid. First time I've ever done that so I hope 'Rach in Finance' uses my extra taxes wisely!
Lots of charities have really benefitted from this over the years and need to remember many charities employ people or use professional services so there's some compensation to the government for loss of revenue due to Gift Aid?
BlueLeanie
On Moderation
People on a low income have to be careful about their donations.
So HMRC can recover the gift aid uplift if they identify that claims have been made that exceed the qualification amount.
Some organisations are very naughty, and "correct" forms when the individual hasn't ticked the gift aid box, and it can come back and bite the donor.
www.gov.uk
So HMRC can recover the gift aid uplift if they identify that claims have been made that exceed the qualification amount.
Some organisations are very naughty, and "correct" forms when the individual hasn't ticked the gift aid box, and it can come back and bite the donor.
Tax relief when you donate to a charity
Tax relief on donations, Gift Aid, payroll giving, leaving a gift in your will, keeping tax records; find a charity; donating land, property or shares
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That's underhand and, if proven, hope there are consequences? Would have thought Charities Commission would take a very dim view on this?
It’s fraud. And at the sharp end, HMRC have more than enough power to make life hard even without the Commission intervening.
True. But if HMRC just investigate and audit claims, that will be significant in itself - and could cause the charity a world of pain as a result.
BlueLeanie
On Moderation
The pain starts with the victim though. For the person I know, suddenly getting an HMRC bill for £2,500 after making a generous donation and *deliberately* not ticking the gift-aid box.
They had to struggle to get the evidence to prove that they had not ticked the box, suffered accusations of bullying and intimidation from the Treasurer and Committee, unfriended from Facebook and "sent to Coventry" in the community. It took the intervention of the Police Fraud team to obtain the original signed donation form. All beautifully completed in blue-black Quink and the "gift aid" box roughly ticked in black biro.
Even then it wasn't over. As I understand it, in order to correct the situation, the organisation had to refund HMRC first. They had already spent the cash. The "Pillar of the Community" Trustees now discovering that they were potentially personally liable for the fraud, and risked CCJs if they didn't pay up.
A position that is utterly unacceptable on the part of whoever altered the form. But, as shown with the response, the involvement of government has led to the right outcome.
A very bad situation, however I would suspect is fairly rare.
Not least, that most trustees should understand that they have to do what's best for the charity and such a story would likely negatively impact future donations.
There's two bits of advice I would make.
For smaller donations, give cash in a way which is not directly traceable (in to a donations box or in an envelope without any marks which identify it as coming from you) and in amounts of £20 or less. As charities can claim gift aid (up to an annual limit) on such donations even if the person giving it doesn't pay tax.
For larger donations (whatever large looks like to them) and they don't pay tax is to follow up with an email confirming that they do not wish the gift to have gift aid claimed on it or any future future donations for at least this tax year and asking for a reply to confirm the email instruction has been received (if they want to be doubly sure, they could await the reply before making the donation). In doing so the individual would have evidence of their clear instruction.
I agree with this, but it's worth note that claims under the Gift Aid Small Donations Scheme are capped at donations of £8000/year, and they can be applied to donations of up to £30 per time, in cash or by card - and they do not have to be anonymous.
We then go back to the justification for a claim - if I claim Gift Aid on a donation, I am administering the intent of the donor. It is not my call to vary their intent, and it is my duty to ensure that if I'm not clear about the status of the donation, I clarify it before I try to claim it.
Egg Centric
Established Member
The obvious thing to change about gift aid if the government were so inclined is to stop higher/additional rate tax payers from being able to claim back the additional relief on their tax return for museum admissions and so on. There could be an alternative scheme for "proper" donations - where this makes a lot more sense - but it feels odd that there's effectively an "earn £50k+ discount" of up to 31.25% on museums and other attractions, just because they're charitable!
Tbf a lot between 50k-150k are on pure PAYE and don't even know they can do this, or don't bother, but it's definitely not a negligible amount.
Tbf a lot between 50k-150k are on pure PAYE and don't even know they can do this, or don't bother, but it's definitely not a negligible amount.
There's a reasonable question about the extra relief for Higher Rate taxpayers. However, I'd suggest that it should be all or nothing - the whole balance of the system relies on the idea that all donations are of the same status, and doesn't require special record keeping by the organisation, HMRC or the taxpayer. Part of the beauty - by design - of the Gift Aid system is it's simplicity; suggestions like these would drive a deal more complexity.
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