The value of tax relief for charities and individual donors rose to £5.14bn in the year to March 2016, according to figures published today by HM Revenue & Customs.
According to the provisional figures, charities received £1.3bn in gift aid, and £1.79bn in relief from business rates, up from £1.21bn and £1.69bn the previous year.
Inheritance tax relief rose from £760m to £880m, possibly as a result of a new government relief which allows a 10 per cent reduction in inheritance tax for those leaving more than 10 per cent of their estate to charity.
But the Gift Aid Small Donations Scheme, intended to raise more than £100m a year for charity, raised only £26m. Charity infrastructure bodies said this was because the scheme was too complex and hard for small charities to understand.
Andrew O'Brien, head of policy and engagement at the Charity Finance Group, said: “The substantial rise in gift aid repayments and business rates is a positive sign that charities are continuing to maximise the value of these reliefs so that they can put more resources into supporting their beneficiaries.
“It also highlights the value of CFG and NCVO's work in preserving business rate relief in the last Budget, which is now worth nearly £1.8bn to our sector.
“However, these figures are a welcome reminder that there needs to be big changes to the Gift Aid Small Donations Scheme, which continues to underperform expectations. The government's consultation is still just tinkering around the edges, but hopefully they will be open to bold reform of the scheme so that small charities can make the most of it.”
John Hemming, chair of the Charity Tax Group, said: “Today’s statistics highlight the vital ongoing importance of gift aid to charities and donors and it is encouraging to see that overall tax relief to charities increasing slightly against what is an uncertain future financial backdrop for the sector. Gift aid is the lifeblood of many charities and now worth over £1m a year to over 150 charities.
“While the Gift Aid Small Donations Scheme has increased, it is still experiencing far lower take-up than was originally envisaged. We await next year’s statistics to see whether the increased limits from April 2016 and proposed reforms to the Scheme, including a relaxation of the gift aid history requirement, will help to widen its accessibility, particularly among smaller charities.”
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