The government will review the rules around the benefits charities can give to donors, the Treasury announced in the latest Budget document.
Current rules mean that donors can only receive benefits worth 5 per cent of the value of their donation, or £2,500, whichever is lower, in exchange for a donation.
A donor receives a benefit if they receive any item as a result of their donation, ranging from cheap or free tickets to a token such as a poppy.
But the Charity Tax Group (CTG) has outlined a number of uncertainties in the current rules which need clarification.
CTG said that a clearer test was needed to establish whether a donor received a benefit “in consequence” of having made a donation. It also said it was often not clear to charities how to value benefits donors received.
And it said charities had complained that HM Revenue & Customs’ advice on the subject was inconsistent.
Daniel Fluskey, head of policy at the Institute of Fundraising, said his organisation was keen to work with the government in an effort to make the rules clearer and easier for charities to use.
“We are however mindful to ensure that any process of simplification does not have an inadvertent negative impact on charities being able to fundraise effectively using gift aid,” he said.
HM Revenue & Customs has agreed to convene a subgroup of the Charity Tax Forum to address the issue.
The government has also introduced a range of other measures which will provide some benefit to the voluntary sector.
It will increase the amount of tax relief available to donors who gift cultural works of art to the nation, from £30m to £40m.
The Budget document also confirmed that the Finance Bill which follows the Budget will include legislation to make it clear that charities get relief from stamp duty land tax if buying property jointly with a non-charity.
“The charity will be able to claim relief from SDLT on the proportion of the purchase attributable to it,” the Budget document said.
The Finance Bill will also include legislation to allow tax relief on gifts of cash from companies to community amateur sports clubs, the document said.
Please contact Lesley Malkin for more information regarding charity accounting.
For the full 2014 Budget Summary please click this link BWM 2014 Budget Report