Value of charity tax reliefs top £5 billion but gift aid receipts remain static

HMRC have today published their annual statistics on the value of tax reliefs given to charities and their donors which are now worth over £5 billion a year. 

Commenting on the publication of the new figures, Graham Batty, a charity tax specialist at RSM said: 'While the overall trend remains upwards there are a couple of important messages for charities in what, on the face of it, is a dry document.

'It may come as a surprise but the biggest element of the value received by charities is business rate relief which was worth just over £2 billion in 2017-2018. That is an inflation busting 9.4 per cent increase. However, given the pressure on their finances, local authorities are beginning to resist granting charities more than the mandatory 80 per cent relief. They also seem to be starting to look closely at claims – a charity has recently been refused rates relief for some of its charity shops because they were run by a non-charitable subsidiary rather than directly by the charity itself. 

'The second, and perhaps more worrying message concerns gift aid. The amount reclaimed by charities - and the additional tax relief claimed by donors - has been fairly static over the last few years. This is something that will concern charities given how hard they work to raise funds, but what is the cause? Digging further into the statistics it is noted that the greatest value of gift aid donations declared on tax returns come from the over 65s. The increases in personal allowances and tax free allowances for savings income over recent years mean that many older people now pay less tax -  prerequisite for making a gift aid donation - than they did in the past. They no doubt continue to give but outside of gift aid. There is a real need for charities, with the help of HMRC, to promote gift aid and engage with younger donors.'