Charities lukewarm on Budget

Giving to charity will become easier and more tax efficient under Chancellor Gordon Brown's latest budget measures, but increases in National Insurance will cost charities an extra £50m a year.

The failure of the Chancellor yet again to deal with the irrecoverable VAT problem is a massive setback

Shirley Scott, director of CDFG

Charities welcomed a move to allow donors to offset donations against a previous year's income tax liability through the Gift Aid.

Another scheme announced by the Chancellor will mean that taxpayers can nominate a charity to receive all or part of a tax rebate from 2004.

Charities will also benefit from new rules which will exempt donations of land or buildings to charity from corporation and income tax.

Simon Hebditch of the Charities Aid Foundation, said: "The idea that a donor can offset their Gift Aid donation against a previous year's income tax liability opens up exciting new opportunities for giving."

Disappointment

But while the Charity Finance Directors' Group (CFDG) welcomed these moves, it said it was disappointed with the increase in National Insurance contributions from next April.

Les Jones, CFDG Vice Chairman, said: "This increase will have a direct effect on much charitable work and I very much hope Gordon Brown will look at ways that the Charity Sector can be relieved of even more pressure on its costs and services."

CFDG said that it was also disappointed that the chancellor had ignored the impact of value-added tax (VAT) on charities.

It is estimated that charities lose between £400million and £1billion per year due to irrecoverable VAT.

Shirley Scott, CFDG Director, criticised the decision to ignore charities' demands over VAT.

"The failure of the Chancellor yet again to deal with the irrecoverable VAT problem is a massive setback.

"Charities already play an important role in public service provision including the health service."

CFDB is also disappointed that the Chancellor did not chose to announce that the 10% Government top-up on payroll giving would be extended.