The amount of Gift Aid paid out on charitable donations has risen significantly for the first time in three years, according to new government figures.
HM Revenue & Customs’ provisional data for the year to March 2019, published yesterday, shows that the amount of Gift Aid claimed by charities rose to a record £1.35bn, up £90m from the year before, from eligible donations worth £5.41bn.
Total tax reliefs for charities, including rates relief and tax repayments, rose to a record high of £3.79bn, up from £3.68bn the year before.
Reliefs for individuals, including inheritance tax and higher rate relief on Gift Aid and covenants, rose from £1.50bn to £1.53bn, which is lower than the 2016/17 record of £1.61bn.
This means the total relief for charities and individuals has risen to its highest ever amount of £5.32bn, up from £5.18bn the previous year.
Business rates still represent the most valuable source of rates relief for charities, rising from £2.16bn to £2.22bn.
Meanwhile, after a three-year plateau, the amount raised from the Gift Aid Small Donations Scheme (GASDS) rose from £30m to £40m, although this is still much lower than the £100m a year the relief was originally expected to raise.
‘Pleased to see Gift Aid rise’
The Charity Tax Group (CTG) welcomed the positive figures, which it said showed “the continued importance of tax reliefs to charities”.
However, chair John Hemming said it was “important to remember that charities do still pay a lot of tax, including significant amounts of irrecoverable VAT”.
He said: “We are pleased to see that the amount of Gift Aid claimed by charities has increased by 7 per cent after a three-year plateau.
“Efforts to promote Gift Aid and improve donor understanding are ongoing and CTG is working closely with charities and digital experts to ensure that Gift Aid is future-proofed.
“The 33 per cent increase in the amount of GASDS claimed is very welcome, but more can be done to maximise the awareness and uptake of this relief.
“Rates relief continues to be the most valuable relief for charities, but this comes against a backdrop of higher rates bills and an ongoing squeeze on discretionary reliefs.
“This will need to be monitored closely as the relief is vital for many charities to be able to deliver services and support their beneficiaries."
HMRC stopped providing estimates of VAT reliefs available to charities two years ago, which Hemming said was disappointing.
“However, CTG is undertaking a research project on the total VAT burden facing charities, including detailed analysis of the scale of reliefs and the total irrecoverable VAT burden. We would encourage charities to complete our forthcoming survey and support this initiative,” he added.
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