Charities call for tax exemption during downturnCharities demand changes to VAT and Gift Aid rules

29 December 2008

Charities are calling for exemption from VAT to help them through tough financial times, the chief executive of Save the Children said today.

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Charity wristbands are a popular way to show your support for a particular cause

Jasmine Whitbread said charities are facing a drop in income at a time when they are experiencing increased demand for their services. The Government could deliver £500 million a year to charities by exempting them from VAT, she said.

She also called on the government to change the rules of Gift Aid - which allows charities to reclaim donors' basic rate UK income tax on donations - so that donors are required to opt out of the scheme, rather than opt in as at present.

Drop in donations

Figures from the Charity Commission suggest that a quarter of charities are experiencing a drop in donations, while one in 12 are making redundancies, reported BBC Radio 4's Today programme.

Ms Whitbread told Today: 'Income is down already and, more importantly, we can see that it is going to be down for all charities next year and possibly longer.'

Martyn Saville of Which? said: 'As consumers, companies and charities alike are forced to tighten their belts in the current economic climate, it is vital that donors make the most of the money they give to charity. If you're giving money to a good cause, make sure you give the charity permission to reclaim Gift Aid if you're a UK taxpayer.

Payroll giving scheme

'Ask your employer if they run a payroll giving scheme - these are tax efficient and allow charities to make the most of your donation. 

'If your employer doesn't run a payroll giving scheme, consider setting up a monthly direct debit yourself - this allows charities to plan their income for the year. Or you could remember a charity in your will, donate shares, buy birthday and Christmas gifts direct from charities or give your time or unwanted items.'

Copyright Press Association 2008