HC Deb 16 March 1989 vol 149 cc301-2W
Mr. Tim Smith

To ask the Chancellor of the Exchequer what changes the Government have introduced since 1979 to benefit charities financially.

Mr. Lilley

Successive Finance Acts, and the measures announced in the Budget on March 14 will have:

  1. (i) reduced the period of charitable covenants qualifying for tax relief from "over six" to "over three" years (1980);
  2. (ii) would allow heritage and conservation charities to give covenanted members free or cheap entry to properties without loss of tax relief on covenants (1989 Budget);
  3. (iii) introduced higher rate income tax relief for charitable covenants with a £3,000 limit (1980); increased the qualifying limit to £5,000 (1983); and to £10,000 (1985); and abolished the limit completely in 1986;
  4. (iv) raised the capital transfer tax exemption limit for gifts to charities on or within one year of death from £100,000 to £200,000 (1980) and then to £250,000 (1982) before abolishing the limit completely in 1983;
  5. (v) provided in place of reduced rate relief, a complete exemption from stamp duty for all transfers to charities, whether by sale or gift (1982);
  6. (vi) given tax relief for employers costs met by a company during a period of secondment to a charity (1983), and extended that to all employers (1984);
  7. (vii) introduced relief for single donations by non-close companies (1986);
  8. (viii) introduced VAT zero rating for cars leased to the disabled (1984). The Budget would exempt such cars from car tax as well;
  9. (ix) extended the range of specialised goods and services eligible for VAT zero rating when acquired by charities (eg medicinal products (1986)). The Budget extends this relief to sterilising equipment and to classified advertising;
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  10. (x) largely shielded charities from the effect of the ECJ judgement on UK zero-rates by zero-rating fuel and power and new construction for charities' non-business purposes; and by not giving landlords the option to tax rent from charities non-business buildings other than offices and by phasing in over 5 years options to tax the rent on charities' business and office accommodation;
  11. (xi) the Budget exempted from VAT fund-raising events by charities;
  12. (xii) introduced the payroll giving scheme (1986) with an annual limit of £100, to operate from April 1987. The limit was subsequently raised to £120 (1987) and doubled to £240 (1988). The Budget would double this limit again to £480.

In addition, the 1988 Local Government Finance Act provides for charities to be relieved from April 1990 of at minimum 80 per cent. of their business rate due.

It is estimated that the total amount of tax repaid to charities in respect of income from which tax has been deducted increased from £130 million in 1978–79 to some £400 million in 1987–88; this was itself an increase of £60 million compared with 1986–87. The Government provide substantial support in grants as well as in tax relief. The total level of grants increased by over 90 per cent. in real terms between 1979–80 and 1986–87 when it stood at £1,173 million.

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