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Tax reliefs for charities totalled £3.79bn in 2018/19 – an increase of 5% from the previous tax year which is primarily driven by a £90m increase in Gift Aid relief claimed by charities. The largest relief continues to be Business Rates relief, increasing by £60m in the tax year.
After a number of years of static movements in Gift Aid relief (including the Gift Aid Small Donations Scheme (GASDS)), there has been a promising increase of 7% in relief for charities to £1.35bn from Gift Aid. The relief from GASDS has increased 33% to £40m. Tax reliefs for individuals on charitable donations have increased, but at a lesser rate, with a total increase of only 2% to a total of £1.49bn.
The progress on Gift Aid is encouraging, especially following the beneficial changes introduced to the Gift Aid system over the last two years such as increased flexibility to donor intermediaries and broadening of the GASDS from £5,000 to £8,000 per charity or community building. There were claims from 73,050 charities, which is up by 850 on the previous tax year.
Further developments, which took effect in April 2019 (such as an increase in the maximum donation a charity may claim a Gift Aid top-up on under the GASDS to £30 and a relaxation of paperwork regarding the Retail Gift Aid scheme) might help increase the take-up of Gift Aid. HMRC estimates that £560m of Gift Aid is not being claimed each year, perhaps due to charities being too cautious and missing out on valid Gift Aid claims. We believe there continue to be instances to increase the tax relief obtained on donations by identifying opportunities and making actual and potential donors aware of the tax reliefs and their benefits.
HMRC’s full publication is available here.
Have a question on tax planning for charities?
If you have a query regarding tax planning for charities, fill in the form below and one of our experts will be in touch.
As a charitable organisation, there are a wide range of exemptions you can make the most of for taxes, including corporation tax, income tax, stamp duty and business rates. You can also benefit from tax reliefs such as Gift Aid and Social Investment Tax Relief, which provide further opportunities for charities to thrive.
Our not-for-profit tax team help to ensure your charity is fully tax-compliant and structured optimally to make the best use of the reliefs you’re entitled to.
Unlike others, we have separate dedicated tax specialists who work within our charity and not-for-profit team. Having chosen to specialise in the sector, most have trained as charity experts from day one. This means you have a team of experts at your disposal who really understand your sector and needs.
You can count on regular tax communications on developments and insights relevant to your industry, including our annual charity tax updates after the Chancellor’s Autumn and Spring Budgets. We also offer topical tax update seminars and bespoke fundraising workshops, keeping you up to speed with the latest requirements and opportunities.
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