Budget Summary Part 2 – Charities

My Father-in-Law just correctly pointed out that I failed to include the two big charity related changes that were announced in today’s budget. Forgive me, I blame post-Red Nose Day tiredness and the fact I went to the gym today.

So… The two changes were as follows:

– People leaving 10% or more of their estate to charity will receive a 10% reduction on their inheritance tax bill.

– Charities will be allowed to claim Gift Aid on small cash donations, up to an annual limit of £5,000

The inheritance tax changes are a really positive step forward in my view, allowing all those eligible to pay inheritance tax the opportunity to give without any actual cost to themselves. Early indications estimate the value of this change at £300million. With a malaria net costing less than £5 a go, that is real money that could change countless lives and the government should be applauded for it.

Any move to simplify Gift Aid should be applauded and I am sure a number of very small charities may benefit from this change – but for me it is a purely tokenistic change aimed at appeasing a sector that is in crisis. The current system is hugely bureaucratic and burdensome, not just of charities but also on the treasury, this bureaucracy also leaves in the region of £750million in Gift Aid left unclaimed every year. The government could and should have been more radical.

Most importantly though this budget did nothing to reverse the damage last summers emergency budget and the spending review did on UK charities. Radical cuts to budgets at both local and national level have absolutely savaged the ability of charities large and small to even maintain the services they deliver, let alone allow them to grow in response to increasing demand. The next few years are likely to see hundreds of charities and with it thousands of community level projects go to the wall. Small changes to gift aid, and even the more significant change to inheritance tax, will do little to change this reality.

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