Why fair tax policy matters for charities
We champion a fair, modern tax system that enables charities to focus their resources where they matter most: delivering essential services, supporting vulnerable people, and strengthening communities. At a time when demand for charitable services is rising and financial pressures on organisations are intensifying, CTG works to ensure that tax policy recognises the unique role charities play in society.
We engage directly with HM Treasury, HMRC, Parliamentarians and policymakers to advocate for practical reforms, defend vital reliefs, and correct unintended consequences in legislation. Our campaigns are grounded in real world evidence and aimed at strengthening the sector’s financial resilience, operational efficiency and capacity to deliver for the communities they serve. These priorities are at the heart of our mission to deliver a fairer tax system for charities:
Our mission to deliver a fairer tax system for charities
Gift Aid: Protect the relief, modernise the rules and simplify the system
Gift Aid is one of the most important sources of income for UK charities, worth over £1.7bn a year. Protecting this relief is of paramount importance. However, a system designed in a paper‑based era now struggles to keep pace with digital fundraising, new payment methods and changing donor behaviour. Complexity and error cost the sector an estimated £200m each year.
CTG is working with the Government to prioritise the delivery of a streamlined, digital Gift Aid model that reduces errors, lowers administrative burdens and supports long‑term sustainability. We are also actively engaging with parliamentarians across political boundaries on the need for reform and welcome insight from our members on how Gift Aid can be made fit for the modern age.
Zero‑rate VAT for all charity advertising, including social media
Charities rely on advertising not just to raise awareness and donations, but to reach people in urgent need. VAT relief on advertising is therefore a vital support, yet the current rules do not reflect how audiences consume information today. While traditional advertising is zero‑rated, HMRC’s interpretation excludes most social media advertising, leaving charities paying VAT on platforms that are now essential to modern outreach and fundraising.
This outdated distinction increases costs, restricts reach, and penalises charities for using the same digital channels that the rest of society depends on. At a time when online fundraising, digital campaigning, and targeted outreach are more important than ever, the VAT system must keep pace.
VAT on social care: ending unfair costs for charity providers
Charities and other not‑for‑profit organisations play a vital role in delivering statutory social care services on behalf of local authorities. However, unlike councils delivering services in‑house, these providers cannot recover VAT, leaving them with irrecoverable VAT costs.
This disparity diverts public funding away from frontline care, increases the cost of delivery, and distorts commissioning decisions by favouring in‑house provision over specialist charity providers. As demand for social care continues to rise, the VAT system should not penalise organisations delivering essential services. CTG is calling for reform to extend recovery to charities and Community Interest Companies delivering statutory social care services on behalf of local authorities.