Charities face tax relief threat

TAX relief on millions of pounds of charitable donations is under threat as a result of a report released this week, writes Maria Scott.

The report, partly sponsored by the Home Office, recommends that only charities offering services should receive government money. However, this would not be by means of tax relief in its present form. Campaigning organisations would receive no government help.

At present charities receive more than pounds 300m a year in tax relief through covenanted donations from individuals and from the gift aid and payroll giving schemes. This figure represents the value of basic- rate tax relief.

Higher-rate taxpayers receive an extra 15 per cent relief on their donations - the difference between basic rate relief at 25 per cent and higher rate tax at 40 per cent. Some of this will be ploughed back by these people into their chosen charities but some will be set against tax bills.

Charities also fear the proposals could make them liable to inheritance tax on legacies such as the pounds 46m left to charity by the businesswoman Violet Eveson. Beneficiaries of this money are expected to include hospices and the homeless.