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Audit office highlights gift aid uncertainties

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HMRC and HM Treasury do not know if gift aid and other tax reliefs on donations provide as much value for the charitable sector as they could, according to a report published by the National Audit Office (NAO) on 21 November.

The report recognises that gift aid provides an important source of income for many charities, but it finds that there is not enough evidence to conclude that reliefs on donations in their current form, and the way they are implemented, provide value for money. First, there is insufficient evidence that government has actively encouraged take-up of the reliefs so that those charities which are entitled to them get the intended benefits. Secondly, HMRC has not collected the data which would enable it to conclude how tax incentives since 2000 have affected donor behavior or if they have increased the value of donations.

Amyas Morse, head of the NAO, said: ‘Gift aid is an important source of income for many charities, worth £1bn to charities in 2012/13. The changes made in 2000 to increase charitable giving resulted in a further £940m of reliefs going to individuals and companies as an incentive to give more money to charity. However, the exchequer departments cannot demonstrate that these incentives are working, or that the increased cost to the taxpayer has resulted in a rise in donations to charity.’

Issue: 1194
Categories: News , Private client taxes