§ Mr. Lawrenceasked the Chancellor of the Exchequer if he will list the tax concessions he gives to charities; and if he will make a statement.
§ Mr. HayhoeCharities are exempt from income tax, corporation tax and capital gains tax on income (other than certain trading profits) and gains, provided that the income or gains concerned are applied to charitable purposes only; they are also exempt from development land tax. To encourage donations to charities, the period of charitable convenants has been reduced from "over 6" to "over 3" years, and tax relief at the higher rates is available to individuals on payments up to £5,000. In addition companies can claim tax relief on gifts to charities which are wholly and exclusively for the purposes of the trade or business and on the salary costs of an employee seconded to a charity. Gifts and bequests to charities are exempt from capital transfer tax and stamp duty.
There are also a number of VAT reliefs which benefit charities. Goods which are donated for sale by a charity established primarily for the relief of distress or for the protection or benefit of animals are zero-rated on sale. Goods which are exported by charities are also zero-rated. In addition a wide range of medical or scientific equipment (including ambulances) which is used in medical research, diagnosis or treatment is relieved when bought by a charity either for use in its own establishments which provide care, or for donation to a health authority, a non-profit making hospital or research institution or to another charity which provides care. This relief also covers the purchase of equipment and appliances solely for the use of handicapped persons, either in their own homes or in a charitable institution which cares for the handicapped. The hire of any of the above goods by a charity and the services of repair and maintenance are also relieved.
The case for a general relief for charities from the VAT they bear on their non-business purchases has been carefully considered by the Government on several occasions, but has not been accepted for three main reasons. First, VAT relief would give a very uneven spread of benefits. The actual sums going to each body would depend on its pattern of spending rather than the level of public support it enjoyed. Second, it would be 366W expensive. Precisely how much it would cost is not calculable, but it would certainly run into tens of millions of pounds of revenue which would have to be raised from other sources. Third, the size and administrative complexity of a relief scheme would make it a very wasteful and inefficient way of helping charities.