Charity Aid has said a decision to introduce a charity tax break is not sustainable and should be reversed.
Key points:The charity says the tax break could save £1.4bn a year on the national budgetThe Government says it will consult with charities to consider the impact on charitiesThe charity said there are “some very real and very important” issues at stakeThe decision, announced by the Department for Business, Innovation and Skills (BIS) last month, is expected to save the Government £1 billion a year by the end of the financial year.
But charity chief executive David Hutton said the move would “only have a modest impact” on charity funding, because most charities would continue to pay the tax regardless.
He said charities should be able to make “robust decisions” about what to spend their money on.
“The Government’s plan is to spend £1bn on the National Lottery every year, which would have a direct impact on the charity sector,” he said.
“And that’s despite the fact that charities have already paid the tax in their accounts since 2013.”
We know that a significant proportion of charities will not be able or will not want to pay this tax and so we will be consulting with charities and the Government to assess what impact the change will have on their funding.
“Mr Hutton warned that it could mean that charities “will not have a lot of money to pay for vital services” such as the NHS, the courts and prisons.”
These decisions are deeply unpopular, and we don’t want them to be made,” he added.”
But there are some very real, very important issues at play.
“The charity sector needs to be well-resourced and well-run to deliver services to those in need and so that we have a long-term sustainable way forward for the charity industry.”BIS spokesperson for tax policy and compliance, Matthew Burt, said that charities had a responsibility to invest in the future.
“A tax break will give charities the opportunity to maximise their tax receipts, and they should do so,” he told the BBC.”BIS supports any changes to tax laws that help ensure charities’ budgets are sustainable, and it encourages charities to invest their money in their future.”
Brisbane-based charity charity Charity Aid, which has more than 7,000 members in England and Wales, is against the tax change and has called on the Government not to proceed.
“Charities will have to take the hard line to make sure that their tax payers are protected, and the impact will only be felt by some of our most vulnerable members,” said Mr Hutton.
“As we saw last year, this is a very serious blow to our local charities.”
The charity’s chief executive, Dr Hilda Richardson, said she was “deeply concerned” about the decision.
“There is an urgent need to reduce the impact of the new tax, and charities should not be penalised for the decisions they take to ensure that our members have access to essential services,” she said.”[We] want to ensure the Government does the right thing to ensure there is an end to the tax.”
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