Gift Aid And Other Tax Reliefs On Charitable Donations
HC 835, Forty-First Report Of Session 2013-14 - Report, Together with Formal Minutes, Oral and Written Evidence
- House of Commons - Committee of Public Accounts
- TSO (The Stationery Office)
The report 'Gift Aid And Other Tax Reliefs On Charitable Donations (HC 835)' examines how HM Revenue and Customs (HMRC) are monitoring Gift Aid, which allows charities to reclaim the basic rate of tax paid on donations. Other reliefs allow the donor rather than the charity to receive all of the tax benefit on donations. These reliefs on donations provide a tax incentive to donors by allowing them to reduce their tax liability.
In 2012-13, charities received just over £1 billion in tax repayments through Gift Aid donations, and individuals and companies also received a tax benefit on their donations worth almost £1 billion. HMRC has not collected data to enable it to evaluate if Gift Aid is working as Parliament intended.
HMRC has failed to plan for how to monitor and assess the impact of new measures introduced in 2000, so it does not know if these reliefs have encouraged more people to give more to charity. In particular HMRC does not have enough information about the impact of changes to Corporate Gift Aid, with some evidence suggesting the change may have reduced the income charities receive from donations by businesses.
The abuse of reliefs on charitable donations by individuals and companies has lost tax revenue. HMRC estimates that £170 million was lost in 2012-13 through avoidance, fraud and error resulting from the misuse of these reliefs.
The Committee concludes that the sharing of information within HMRC and with other bodies, such as the Charity Commission, has been inadequate; and that HMRC has not adequately simplified the tax rules for reliefs on donations, nor committed enough resources to administering Gift Aid.
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