Budget 2014: HMRC outreach teams to help small charities benefit from gift aid

Charity Comments Off on Budget 2014: HMRC outreach teams to help small charities benefit from gift aid

The government will encourage more donors to use gift aid and help ensure smaller charities are registered for the reliefs they are entitled to.

Documents released as part of the latest Budget say this will include “targeted outreach work”, a simpler application process and work to understand donor behaviour.

The Budget report also restates the government’s intention, as outlined in the Autumn Statement, to bring in legislation to allow non-charity intermediaries to play a greater role in operating gift aid, which will be set out in the Finance Bill 2015.

In a letter to NCVO ahead of the Budget, Nicky Morgan, the Economic Secretary to the Treasury, said the legislation should be “particularly beneficial in the growing area of digital donations”.

She said an outreach team is being created in HM Revenue and Customs to help more small charities benefit from gift aid and the Gift Aid Small Donations Scheme, which was introduced last April to provide a gift aid-like relief on up to £5,000 of small donations each year.

The government will also provide a “common portal” for charities so they do not need to register with both the Charity Commission and HMRC in order to claim charity tax reliefs, Morgan says.

The government will also be looking at the donor experience of using gift aid to find any barriers to take-up, she says.

The sector has broadly welcomed the measures.

Karl Wilding, director of public policy at the NCVO, said: “We called on government to do more to support smaller charities so we’re pleased to see the announcement of an outreach team to help smaller charities get the tax reliefs they’re entitled to.”

Both the Charities Aid Foundation and the Institute of Fundraising (IoF) said more detail on the legislation was needed.

Daniel Fluskey, head of policy and research at the IoF, said: “Regarding legislating to allow non-charity intermediaries a greater role in gift aid, there is potential this could create an easier and more efficient system for people who donate online or via their phones. However, the devil will be in the detail and it’s important that the right framework is put in place so that this works best for charities and donors.”

The Treasury consulted last year on proposals to modernise gift aid and make it easier for charities to claim tax relief on donations made online or by text message.

Simplifying the gift aid declaration and a universal gift aid database that would enable donors to make a single declaration were among the proposals considered.

Rhodri Davies, policy manager at CAF, said there had been discussions with the sector about simplifying the declaration since the consultation.

But he said the Treasury had decided against the universal database. “Bigger questions about future-proofing gift aid remain unanswered,” Davies said. “Efforts are being made to improve gift aid but they are not really ambitious enough to answer the questions properly such as the need for a universal database of declarations.”

Davies said further work to understand donor behaviour and barriers to take up should build on the work of the Cabinet Office’s Behavioural Insights Team to find the most effective ways of ‘nudging’ donors to use gift aid.

Please contact Lesley Malkin for more information regarding charity accounting.

For the full 2014 Budget Summary please click this link BWM 2014 Budget Report