Charitable Giving or a Tax Dodge

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Charitable giving perhaps its time to move the goal posts back again. In the “Charities Act 2006” http://www.legislation.gov.uk/ukpga/2006/50/contents the act lists thirteen purposes the 13th says “other purposes currently recognised as charitable and any new charitable purposes which are similar to another charitable purpose”. This seems ridiculous to me it merely provides an opportunity for registration as a charity to to receive the favourable tax status of charities.

 

Back in 1891 Lord McNaughten identified just four purposes

  1. the relief of poverty,
  2. the advancement of education
  3. the advancement of religion
  4. other purposes considered beneficial to the community.

The 13th and 4th in both it may seem the same at first glance, but I would suggest that the word “community” in Lord McNaughten’s list is far from “other purposes currently recognised as charitable and any new charitable purposes which are similar to another charitable purpose” used in the 2006 Act.

 

In the recent budget the chancellor announced a cap on charitable giving of one million pounds or twenty-five percent of the individuals income. This has caused a minor storm but caused me to look at charities in the UK. The regulatory body “The Charity

Commission” lists 162,136 such bodies.  

It states that not all charities have to register  and sets out exemption and and exceptions many of which are universities and museums. So obviously there could be many more but I have used the sites of the “Charities Commission” and the “Charities Act 2006” for this article.

 

Within the various lists you can find on the site are a number of organisations you would associate with government offices such as the “British Council”.This is wrong these organisations come under the government aide programme which the government has budgeted for and should be separated from the  truly charitable organisations.

The universities and private education schools and colleges all have some form of fund through which their alumni are able to contribute. These could be best described as networks not charities.

Plus they all come under the department of education another government body therefore a budgeted for by government. Some will argue what about the bursaries and scholarships these schools offer for children from not so affluent backgrounds. Simple to me if you charge then you can charge more if this means less children are sent to the school then the school can reduce costs as outings should be reduced.

It would be simple for the chancellor to set out with HMRC a charitable giving cap. I would go along the lines of a universal cap on tax relief on charitable giving. Whether I earn £7000 or £7 million pounds a year of income, the tax relief should be given at the minimum rate of tax currently 20%. This would upset charities I know but it should allay the chancellors and may fears that many wealthy people budget for charitable giving as part of their financial year.

To my mind charitable giving is mostly an instant response. Though if I were on an income of several million pounds per annum. I may respond to a disaster with a donation.  I think I would seek to improve the life of others myself and maybe not so much through direct giving to charities. International charity giving has had a deal of bad press over the years and no government minister has yet allayed my suspicions on how government aide is spent in recipient countries. 

Not yet a grumpy oldman. Oldsputnick.
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