Budget 2011 - benefits for charities

In the budget on Wednesday 23 March the Chancellor of the Exchequer, George Osborne MP, introduced some measures designed to support giving. The measures are aimed at charities but also at expanding social investment.

In summary:

Gift Aid
From April 2013 the Government will introduce a scheme where a charity can claim Gift Aid on smaller donations. Where the gift is £5,000 or less there will be no need for Gift Aid declarations to be made.

There is also an intention that Gift Aid claims should be capable of online filing by 2013.

If your charity receives a donation and wishes to thank the donor then the value of that “Thank You” gift can now be of a value up to £2,500 (rather than £500).

Inheritance
The rate of Inheritance tax will be reduced from 40% to 36% for estates where 10% or more of the net estate is given to charity and where death occurs on or after April 6th 2012. A consultation document is expected in the summer on the detailed implementation of this.

Consideration is also being given to introducing a tax reduction for taxpayers who give a work of art or historical object of national importance to the state. Consultation is also expected on this.

Self Assessment
Self assessment taxpayers who are due a repayment of tax from HMRC may currently direct that the repayment should be made instead to a charity of the taxpayers choice. This “SA Donate” scheme will be withdrawn on tax returns from 2011-2012.

This system was introduced in 2005 but has not been extensively used and there are alternative methods of giving. Less than £400,000 was raised in most years and only a few thousand taxpayers used the system. Most donations were being given to larger charities. The resources will be devoted to the development of online Gift Aid.

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