Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the administrative costs to charities caused by the current manual Gift Aid process, including the time and resources spent correcting errors and navigating rules.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

HMRC has worked collaboratively with a broad range of charity sector stakeholders to explore the potential of Future of Gift Aid (FOGA). This work included extensive research and analysis of the implications of FOGA and the effectiveness of the existing Gift Aid system.

HMRC has not made a formal quantitative assessment of the administrative costs to charities arising from the current Gift Aid process. HMRC will continue to engage with the charities sector to improve the way that Gift Aid works through the use of digital technology.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions she has had with HMRC regarding the Future of Gift Aid pilot, and what assessment has been made of its potential impact on the charity sector.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

HMRC has worked collaboratively with a broad range of charity sector stakeholders to explore the potential of Future of Gift Aid (FOGA). This work included extensive research and analysis of the implications of FOGA and the effectiveness of the existing Gift Aid system.

HMRC has not made a formal quantitative assessment of the administrative costs to charities arising from the current Gift Aid process. HMRC will continue to engage with the charities sector to improve the way that Gift Aid works through the use of digital technology.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussion she has had with the Secretary of State for Culture, Media and Sport about the financial burden on charities arising from VAT on social media advertising.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26. Taxation is a vital source of revenue that helps to fund vital public services including schools and hospitals.

Charities already benefit from a reduced (5%) or zero rate of tax when purchasing some goods and services. More information about VAT relief for charities can be found here: VAT for charities: What qualifies for VAT relief - GOV.UK. The Government has no plans to broaden this list of goods and services to include social media advertising, but takes steps elsewhere in the tax system to ensure that charities receive treatment that takes account of their unique status and invaluable contribution.

Our tax regime for charities, including gift aid and an exemption from paying business rates, is among the most generous of anywhere in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions she has had with the Secretary of State for Culture, Media and Sport on updating VAT guidance to recognise social media advertising as qualifying zero rated charity advertising.

Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s third largest tax, forecast to raise £180 billion in 2025/26. Taxation is a vital source of revenue that helps to fund vital public services including schools and hospitals.

Charities already benefit from a reduced (5%) or zero rate of tax when purchasing some goods and services. More information about VAT relief for charities can be found here: VAT for charities: What qualifies for VAT relief - GOV.UK. The Government has no plans to broaden this list of goods and services to include social media advertising, but takes steps elsewhere in the tax system to ensure that charities receive treatment that takes account of their unique status and invaluable contribution.

Our tax regime for charities, including gift aid and an exemption from paying business rates, is among the most generous of anywhere in the world, with tax reliefs for charities and their donors worth just over £6 billion for the tax year to April 2024.

Found: November 2023, the CIOT and ATT wrote to the newly appointed Financial Secretary to the Treasury, Nigel Huddleston