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Government responds to Gift Aid Forum proposals

The Gift Aid Forum is made up of organisations representing the charity sector and was set up by HM Treasury to investigate proposals for reform and simplification of Gift Aid.

At a forum meeting in July 2010 Peter Fanning (Chief Executive of that Chartered Institute of Taxation) was asked to prepare a report documenting possible recommendations for the improvement of the Gift Aid system. The report was published on 3 December 2010 as the Fanning report along with an official response from Justine Greening MP, the minister responsible for charity taxation. In this response, Justine acknowledged the importance of Gift Aid for charities and made the following key points:

Recommendations to be taken forward:

*A Charity Tax Forum is to be set up by HMRC that will tackle wider issues such as VAT and the development of some of the recommendations in the Fanning report.

*HMRC are developing ‘intelligent forms’ to help charities make accurate gift aid claims.

*HMRC are to look into the costs and benefits of developing an online filing system for gift aid.

*HMRC will ‘move quickly’ on various recommendations where guidance could be improved or clarified such as oral declaration, split payments and sponsored events.

*HMRC is unable to fund a Gift Aid Database at present. However there is strong support for one as this would provide real advantages for charities. As such HMRC will work to ensure that when funds are available, the database will meet legislative and audit requirements.

*HMRC has been asked to take further consideration of a system that will redirect the higher-rate relief to the charity as part of its work with the Charity Tax Forum.

Recommendations not to be taken forward:

*Gift Aid not to apply to money equivalents such as donated goods and expenses because the Treasury believes that this would increase complexity and move Gift Aid away from being a relief on donations of cash.

*Couples will not be able to claim Gift Aid when one donates on behalf of the couple because it would result in the link between the individual donor and the tax they have paid.

*Transitional relief will not be extended as it was introduced to address a particular problem

*Payroll Giving will not be introduced to Gift Aid, but ways of improving and encouraging its use will be looked into.

The letter also noted that more work needs to be done to raise the awareness of Gift Aid amongst donors as well as advance the knowledge and capability of charities in this area.



Date: 14th February, 2011
Author: Wendy Bambrick


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