The figures, compiled by HMRC’s personal taxes division, were citied by the Exchequer Secretary David Gauke in response to a parliamentary question; and they show that last year, HMRC made gift aid payments to charities totalling £1.075 billion.
In addition, HMRC also paid £360 million back to higher-rate taxpayers in tax relief on charitable donations.
More worryingly for HMRC and the government, the latest figures show that since gift aid replaced covenants at the turn of the millennium, basic-rate tax repayments made to charities have increased by almost sixty percent; whilst higher-rate relief returned to taxpayers has increased by two-hundred and sixty percent.
HMRC’s figures are said to provide real evidence of the scale of the problem the government it attempting to address through its proposed cap on tax reliefs; as they show that the cost of the gift aid system to the Exchequer has been growing steadily year on year, and shows no signs of levelling off on its own.
It is believed that by capping the tax reliefs available and thereby encouraging higher-rate donors to give less, HMRC will not only have to pay out less in higher-rate tax relief to the donor, but also less in basic rate repayments to the charities.
For more information, please visit www.twpaccounting.co.uk
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