CTG Newsletter – 5 July 2017
HMRC charity tax statistics 2016-17
HMRC has published the charity tax statistics relating to the tax year 2016-17. The statistics indicate that:
- the total amount of tax relief claimed by charities is provisionally estimated at £3.77bn, which is £50m less than in 2015/16.
- there was a small increase in the amount of Gift Aid claimed by charities, which rose from £1.26bn in 2015/16 to £1.27bn.
- the amount of income tax relief on other charitable income (which can include bank and building society interest, interest from government stocks, income from wayleaves, royalties, estate income and discretionary trust income) reduced from £40m to £10m (having been £20m for a number years beforehand).
- 71,990 charities claimed Gift Aid which is an increase of 1,170 charities on the previous year.
- 150 charities claimed £1m+ and in total claimed £569m, while 50,560 charities claimed <£5k, worth a total of £61m.
- the amount claimed by charities under the Gift Aid Small Donations Scheme increased to £29m from £26m.
- Charity relief (mandatory and discretionary) from national non-domestic rates increased to £1.87bn from £1.84bn.
- VAT relief for charities remained at £400m a year.
- Stamp duty land tax was worth £220m to charities, which is a £60m decrease on 2015/16.
- Gifts of shares and property were worth £70m, which is identical to the previous year, and payroll giving tax relief was worth £40m, which is consistent with every year since 2011/12
- for individuals, inheritance tax relief in 2016/17 was at £840m, compared with £800m the previous year, and higher-rate relief was up by £20m to £520m.
Detailed commentary by HMRC on the newly published charity tax statistics can be found here.
CTG Chairman John Hemming commented:
“We are pleased to see that Gift Aid income has increased by £10m to £1,270m and that GASDS has increased by £3m to £29m. This shows that efforts to promote Gift Aid have been having a positive effect although more can still be done to maximise these important reliefs. The continued increase in the value of non-domestic rates relief for charities shows the vital importance of the current mandatory and discretionary rate relief and the importance of its continued protection”.
VAT recovery for holding companies – MVM case and HMRC guidance
Dermot Rafferty, Senior Manager at EY has updated his commentary on the CJEU case MVM to reflect recent HMRC guidance on VAT recovery by holding companies. He concludes that it is important that holding companies involved in the management of their subsidiaries effectively charge the members of the group for those management services. If you are partly exempt for VAT purposes then you should consider what impact a management charge may have on your Partial Exemption position. Read the full commentary here.
Iberdrola VAT case – A dilution of Sveda?
Dermot has also produced a short case note on a recent AG’s Opinion in Iberdrola, a Bulgarian referral concerning the right of a taxable person to deduct input tax in respect of services provided free of charge relating to the construction or improvement of a property owned and used by a third party. He has questioned whether this Opinion, if followed by the CJEU (which does not always happen) would effectively be a dilution of the important Sveda decision. Read the commentary here.
Round-up of items of interest
- In response to a Parliamentary question on tax allowances, HM Treasury has confirmed that 740,000 people received income tax relief for donations to charity for tax year 2014-15.
- In response to a Parliamentary question, HM Treasury has confirmed that EU VAT rules do not allow the introduction of a reduced rate of VAT for goods and services required for the repair and maintenance of listed buildings and that while the UK remains a member of the EU, it will continue to abide by our rights and obligations.
- HMRC has added a new vendor to the list of Charities Online commercial software suppliers
- An HMRC commentary on annual benefits in kind statistics confirms that “Employer Provided living accommodation had the highest average value of all but relatively low incidence”. We still await confirmation as to when (if at all) HMRC will publish the planned consultation reviewing this tax relief, which is very important to a number of charities.
- Oxford City Council has responded to a Freedom of Information request about which charities were granted mandatory Community Infrastructure Levy (CIL) exemption and those which were not. CIL relief is very valuable for charities and CTG is preparing representations to DCLG officials to demonstrate the importance of retaining a charity exemption following the CIL Review and proposals to replace it with a new type of tariff. We would welcome feedback from charities on their own experiences of claiming the CIL exemption at info@charitytaxgroup.org.uk
Consultations and case law tracker
CTG will be preparing responses to a number of important consultations over the next few months. Our consultation responses rely on input from members and we would encourage you to send us your thoughts, and where relevant submit your own consultation response. The deadlines for forthcoming consultations are outlined below. Please send your feedback via the relevant consultation page on the CTG website or to info@charitytaxgroup.org.uk.
CTG’s VAT case law tracker can be accessed here.
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