Charity Tax Reforms that could Impact Your Business
It has been estimated that around £560m of Gift Aid currently goes unclaimed every year simply because of red tape. In a bid to combat this, the Charity Tax Commission has proposed a major overhaul of the rules concerning charitable donations.
Although potentially good news for charities, their proposals also stand to affect your business. Here’s what you need to know.
Current recommendations to HMRC on charity tax reforms include:
- Reforming Gift Aid so that it works along the same lines as organ donation – unless donors opt out, it would be assumed that donors are happy to pass on their tax reliefs to the charities themselves.
- Introducing mandatory workplace giving schemes in which employees can opt to make donations out of their pre-tax income.
- Simplifying VAT regulations e.g. making charities VAT-exempt or making it easier for them to recover VAT. Removing VAT from wills that bequeath money to charity.
- Encouraging bigger charities to publish more detailed accounts about monies they receive from tax reliefs in a bid to build public trust.
If approved, these reforms could boost charity coffers considerably. However, these changes could also have implications for both payroll administration and employers who don’t currently run workplace gift schemes.
What are your views on payroll donations?