Charity work needs a little refinement

But as the government staged its first Gift Aid consultation gathering on Monday, it was clear that improving the current system does not require the ‘far reaching and innovative ideas’ demanded by those running the event.

To begin with, Gift Aid is somewhat iniquitous in that higher rate taxpayers are allowed to claim personal tax relief in a way that is simply not permitted to standard rate payers. This makes a £100 donation cost around £76 for someone in the 40% tax band, while the standard rate payer has to fund the full cost. The answer here is simple. Include a tick box on the Gift Aid form that allows high rate payers to donate the full 40% tax relief up front.

The tax break was intended to encourage the rich to give more, but the recent headlines of huge philanthropic donations demonstrates that the rich are perhaps not overly occupied with a small amount of tax relief.

This would also help quell the growing criticism of philanthropists that they simply ‘purloin’ taxpayers funds and redirect it to the charity of their choice. These same critics have even managed to conflate Gift Aid giving with tax avoidance, an argument that was always way off the mark.

The Gift Aid system was set up openly by government and requires no fancy footwork by tax advisers to use. All it needs is some refinement before it becomes even better for charities and wholly satisfying for donors, whether they be rich or on modest incomes.