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.
What does this mean?
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.