Cochrane concerned for impact on charities from Treasury proposals on tax relief

Alliance Finance Spokesperson Judith Cochrane MLA has expressed concern on the impact on charities from the Treasury’s proposals for reducing tax relief for donations to a charity. Her comments were made during an Assembly debate on this issue.

Judith Cochrane MLA said: “I have been contacted by a number of representatives from a range of charities in Northern Ireland who are, understandably, concerned that this proposal could have significant negative consequences for our charitable sector. While I support the drive to scrutinise unlimited tax reliefs, I would argue that greater and more realistic consideration needs to be given to this specific proposal, taking on board the expertise available within the charitable sector to ensure the proposed cap does not hinder the significant work of charities across the UK.

“NICVA have recently expressed local concerns, not least through adding their support to the “Give it back George” campaign, appealing to the Chancellor to rethink the proposed cap in the interests of local charities, heavily reliant on public donations to survive. They have reasoned that the addition of the cap will serve only as a disincentive to potential philanthropists, with the impact likely to be felt not only by large charities, but also smaller voluntary and community groups who benefit from grant-making trusts and foundations. Our society consistently lags behind our western counterparts such as the US in relation to charitable donations and philanthropy, and in that regard it would seem that the best way to address this problem would be to encourage more donations, not discourage those already being made.

“The reality of the cap proposed within the latest budget means that instead of looking at these donations through a prism of charitable empathy and social awareness, they are instead to be viewed in a similar light to a much wider range of tax reliefs which yield few such gains. It could be argued that the upper rate tax relief cap on donations may only affect a small number of high earners within our society, but when we adjust our focus to allow for a more holistic view, the suggested cap risks reducing the total value of giving substantially.

“There is a growing perception that through donating such large sums to charity and receiving, currently unlimited, tax relief on their donations, these wealthy donors are somehow profiting from some fairy-tale charity loophole, but this simply is not true, and the sad reality of reducing tax relief from current levels means that many donors will simply give less.

“There is an ironic sense of illogicality to these proposals when we seek to align them to the governments’ own ambitions for sustainability and growth in the third sector, in the hope that it can fill a vital role in the road to economic recovery. In addition to the financial red tape being tied around charitable foundations, Treasury has also confirmed that community interest tax relief (CITR) will be included in the proposed cap, and for those Members unfamiliar with CITR, the scheme encourages investment in disadvantaged communities by giving tax relief to investors who invest in community development finance institutions, which in turn provide loans to businesses and social enterprises. It almost seems in this instance that while one hand from Westminster is patting the third sector on the back and seeking to provide assistance and support, the other is tightening the noose for an eventual, yet altogether avoidable, fall from grace.

“While there is some merit in concerns exercised over bogus and foreign charities being utilised in order to exploit the system, the frequency and impact of such practices simply does not hold weight when compared to the frequency and impact of charitable giving. The problem of tax avoidance through the use of charitable relief should ultimately be dealt with by an effective HMRC, and having discussed the matter with the NI Charities Commission, I also have every faith in their ability to investigate alleged charity misconduct or mismanagement. It is my contention that if we wish to seriously support our charitable foundations and indeed, strengthen our third sector, it is vital that we provide them with our resolute support in relation to these proposals. “


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