Budget helps with Gift Aid and legacies

I do welcome the provisions for the charity sector in the Budget. Honest. It's just that they are going to help fewer charities and therefore beneficiaries than one might guess given it has been called 'the best budget for charities in years'.

The Gift Aid small donations scheme kicks in in two years time.

The inheritance tax threshold affects legacies, which by definition will not come in for a few years time, assuming of course that it does succeed in persuading more people to leave charitable bequests or for those that would leave them anyway to leave larger charitable gifts.

In addition, do you realise that the automatic Gift Aid claim (ie without signed declarations) on small donations up to £5,000 is only available to charities that have been registered with HMRC for at least three years? So, new (and probably small) charities will have to survive for even longer before they get that benefit.

You could even argue that the Gift Aid small donations scheme simply replaces roughly the amount that charities have claimed each year (around £100m) from the Gift Aid transitional relief scheme. Except that given that ends next month and the small donations scheme kicks in in two years' time, the government gets a two year holiday from paying this sum to charities.

According to Tania Mason's Sector to lose £400,000 from scrapping of tax return tick-box in Fundraising magazine, the Government's announcement in the Budget to scrap Self Assessment Donate will cost the sector £400,000 in income. SA Donate lets tax payers opt via their tax return to donate some or all of their tax repayment to charity.

Indeed, she quotes charity tax specialists Baker Tilly as going even further. They suggest that charities are effectively being saddled with the bill of paying for the new online Gift Aid system that will replace SA Donate. She quotes John Conlan, head of charities tax at Baker Tilly, as saying: “Sacrificing SA Donate to pay for an online gift aid system is, in effect, forcing charities to pay for it.”

So, there are pots of jam coming to you (about two years after) tomorrow. Unfortunately some of you reading this now won't be working for the charity you work for now because the money will have run out, and the Budget didn't do much to tide you over.

So, it's hardly three cheers for the government, despite the plentiful, loud and cogently argued requests for support from across the charity sector. Indeed, I can muster just one, rather muted, cheer.

The Charity Tax Group welcomed the Gift Aid elements, especially how they will "help the large number of smaller charities and churches that rely on local collections to support their activities", but added that "there are a number of practical points that need to be addressed around how the £10 limit will be monitored, for example on loose collections".

John Hemming added: "Although the Budget has many good points, CTG is very concerned at the lack of progress on implementing the mandatory cost-sharing exemption that was promised in the last Budget, with no commitment to a date for implementation. CTG has invested a lot of effort in working with HMRC and the Treasury on who the exemption could work. The delay in its implementation may mean that a test case goes to the VAT tribunal arguing direct effect".

Rainbow Trust's Director of Marketing and Communications, David Halliday said: “Rainbow Trust is pleased with the package of measures to encourage more charitable giving set out in George Osborne's budget. We particularly welcome the Chancellor's move to make giving 10 per cent of an individual’s legacy to charity the new norm in the UK.

He added: “It is also interesting that the government will be consulting further on the idea of VAT exemption for charities that share services.”

The charity also welcomed the Chancellor’s widely anticipated freeze on fuel duty.

Rainbow Trust would have seen its annual national fuel bill go up by around £3,750 overnight, if the chancellor had pressed ahead with the planned automatic escalator of 1p per litre in fuel duty plus inflation, due to come into effect in April 2011.

While welfare rights and technology charity Lasa welcomed the announcement about Gift Aid, it also warned, that it will bring little relief to welfare advice charities who are experiencing a 'double whammy' at the moment: an increase in demand but a decrease in local authority funding.

Paul Treloar, Director of Policy and Communications at Lasa, said: "While we welcome the announcement on Gift Aid, it is of little comfort to welfare rights organisations that don't traditionally get donations from the public.

"We are concerned that in the current economic climate, many people who rely on welfare rights charities for expert advice and support will not have access to the services they need."