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Tax on charitable donations
Media release: 07 December 2015
Treasury & Resources to review
Guernsey Tax regime on Charitable Donations
The Association of Guernsey Charities has received confirmation that Treasury and Resources will launch a project to explore the economic benefits of tax relief on charitable donations, and the Minister has undertaken that the new Policy & Resources Department will report back with proposals for change in October 2016 as part of the 2017 Budget Report.
The AGC has been pressing for changes for many years.
Malcolm Woodhams, Vice Chairman of the AGC said “The AGC has for some considerable time been uncomfortable with the level of support given to Bailiwick charities through the tax system.
It is a subject that has been raised formally and informally with Ministers regularly since early 2013, and a detailed submission was made during the Personal Tax and Benefits Review.
We recognise that T&R has had other priorities, but bringing Guernsey’s tax system up to date in this vital area is long overdue.
Charities rely on donations from generous islanders, however the States of Guernsey is not as generous as other jurisdictions in allowing charities to reclaim the income tax, thereby increasing the value of more charitable donations.”
The States’ current tax policy allows only charities to reclaim the income tax on personal donations up to £5,000 (or £10,000 per married couple) but with a minimum of £500.
In Jersey the limits are a minimum of £50, up to a maximum of £500,000, while the United Kingdom has Gift Aid (which means, in effect, that tax can be reclaimed on all donations).
The UK also allows Payroll Giving, which allows salary and wage earners to donate directly from their gross pay, and thereby reduce their tax bills.
The process for making a tax claim in Guernsey is quite cumbersome and onerous, compared with the UK, and furthermore the States does not allow relief for donations by companies and trusts, thereby providing them no particular incentive to donate to charity.
Peter Rose, Chairman of the AGC said “Bailiwick charities are under considerable pressure for funding, particularly so since the adoption of the States’ Financial Transformation Project, which has seen funding frozen or reduced for charities that support essential parts of government social policy.
We have recently seen some charities helping the under-privileged being charged for the use of States’ facilities that were previously given free.
In some cases we have had to use Lottery Funding to support the continuation of these essential services, and I do not think it was ever the intention for Lottery Funds to be returned to the States in this way.
I am therefore very pleased to see that T&R has committed to undertake this review and the AGC will actively assist T&R to get the best outcome for the Bailiwick.”
He added “The States should not fear adopting a more generous regime towards charitable donations.
There is unlikely to be any significant loss of revenue overall to the States; on the contrary, encouraging more charitable donations through the tax system provides a multiplier for the funding made available for charities - every £1 of tax reclaimed results in £5 given to charities. This can only improve the quality of life in the Bailiwick and reduce the demand for some essential services provided by Government.
Furthermore the States already recognises, through the Social Compact between the States and the Charity Sector that, in many cases, charities are much better placed to carry out the services within the States’ Social Policy Plan more efficiently and effectively than States Departments.”
Further information about the proposals from the Association of Guernsey Charities can be found in this Q&A document.