Merryn's Blog

Time for another look at tax relief on charitable giving

Tax relief on charitable giving should be abolished completely. It amounts to vast unaudited and uncontrolled public spending.

When George Osborne suggested that there should be a £50,000 cap on the tax relief permitted on charitable giving, we approved of the idea wholeheartedly. We even felt that this wasn't going far enough.

As far as we can see, all tax relief does is allow donors to channel what is effectively public spending (with taxpayer cash) to their own pet causes that's undemocratic and open to wide abuse. You can read our original post on the matter here.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

I finished my last post on this by saying that not only should all tax relief on charitable giving be instantly abolished, but that once this was done Osborne should take "a long look at charitable status and who should and shouldn't have it, starting with pretty much every arts organisation in the country." Nothing has happened in the last few months to make us feel any differently about this.

But an article in the Times today certainly brings the problem nicely into focus. It concentrates on the case of the Cup Trust one of the UK's bigger charities and also, says the Times, a front for tax avoidance.

Advertisement
Advertisement - Article continues below

In essence, it seems that wealthy "donors" were using the charity not to "improve the lives of young children and adults" (an aim so vague you might be surprised it ever got past the Charity Commission in the first place) but to trade in the gilt market in such a way that they got both tax relief on their money and most of their money back too. I say "their money" but given that it should have been money that ended up with HMRC, it would be more correct perhaps to say "our money".

The point here, as the Times points out, is that those who opposed Osborne's £50,000 cap suggestion can "now see what he was on about". Hundreds of millions of pounds are claimed every year in gift aid and tax relief related to charities. This "is the equivalent of public spending and should be policed just as carefully as the money spent by the government on schools hospitals defence and benefits," says the Times.

This is exactly the point we have been trying to make. Tax relief on charitable giving is effectively nothing but unaudited and uncontrolled public spending. And that is something we can all do without. Osborne needs to have another go at this.

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516758/beyond-the-brexit-talk-the-british-economy-isnt-doing-too-badly
Economy

Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
Visit/economy/uk-economy/600837/rishi-sunak-new-chancellor-spending-splurge
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020
Visit/economy/uk-economy/brexit/600791/will-britain-close-its-doors-to-immigrants-post-brexit
Brexit

Will Britain close its doors to immigrants post-Brexit?

Details have not yet been forthcoming, but Britain will soon have a new immigration policy. What will that mean for businesses and investors?
8 Feb 2020

Most Popular

Visit/economy/uk-economy/600837/rishi-sunak-new-chancellor-spending-splurge
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020
Visit/economy/600814/money-minute-friday-14-february-the-latest-from-rbs-britains-state-owned-bank
Economy

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020
Visit/investments/commodities/silver-other-precious-metals/600812/buy-silver
Silver and other precious metals

You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some…
12 Feb 2020
Visit/investments/stockmarkets/european-stockmarkets/600725/is-2020-the-year-for-european-small-cap
Sponsored

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019