Gift Aid Tax and VAT

What did we learn from the latest Charity Tax Stats?

Blink and you probably missed it, but yesterday, HMRC produced its update to the Charity Tax Statistics for 2014-15. While this might not sound important, they are an important window into the finances of the charity sector. Here are three things that charities should take away from the statistics:

  1. 1.    There is still a lot of potential to grow Gift Aid

The NAO believes that £2.3bn of donations are currently not being claimed for Gift Aid, so it is pleasing to see the amount of Gift Aid being paid out to charities increased by £130m to £1.2bn in 2014-15. CFG wrote to all the main parties ahead of the election to outline the need to grow Gift Aid, along with our friends at the Institute of Fundraising. We highlighted the fact that Gift Aid had been stagnant for several years and had grown only 7.7% between 2010-11 and 2013-14 compared with 16.6% in the period 2005-06 to 2009-10. This sharp increase now upgrades the growth rate since 2010-11 to 20%, but also shows how much room there is for significant increases in Gift Aid claims. Given the funding situation for the sector as a whole, it is more important than ever that we boost update of Gift Aid and maximum the value of donations. CFG is calling for the next government to work with the sector to support a sector-led public awareness campaign to boost uptake and ensure that we close the ‘unclaimed’ Gift Aid gap.

  1. 2.    We need action on Gift Aid Small Donations Scheme now

The cost of Gift Aid Small Donations Scheme (GASDS) has been revised down from £23m to £21m for 2014-15. This is despite predictions that it would cost £85m in 2014-15, when it was first introduced. This means that tens of millions of pounds of top-up payments are going unclaimed. Caron wrote a blog about this for NCVO earlier in the week – and CFG has been campaigning hard to get the government to bring forward its review of the scheme so that we can solve some of the issues that are preventing small charities from taking up the scheme. Every month that goes by with an unreformed GASDS scheme, is another month when charities are losing out. At a time when we are encouraging small charities to fundraise and diversify their income, getting the GASDS right is important to level the playing field for the many charities that raise money through small cash donations.

  1. 3.    We cannot take our business rate relief for granted

It might not be the most exciting tax relief, but business rate relief is vital for charities in order to carry out their work. It is worth more than Gift Aid and is estimated to have grown by £120m in 2014-15 to £1.64bn. The government is consulting on the future of business rates and while it says it wants to keep the charitable rate relief, we need to make sure that we make the case for its importance so that it isn’t lost in any potential reforms. We know that for many charities, particularly delivering on tight margins, business rate relief can make the difference between being able to operate a service and having to wind it up. We cannot take this rate relief for granted, and CFG has worked with others to create a short survey on business rate relief which will help us build the evidence base for keeping the relief. We will be responding to this review shortly, and if you want to get in touch please email us:

This post was last reviewed on 18 October 2018 at 16:56
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