§ Mr. WigginTo ask the Chancellor of the Exchequer (1) if he will make a statement on the withdrawal of Gift Aid from charitable membership; [147150]
(2) how much he expects to raise from withdrawing Gift Aid from charitable membership; [147153]
(3) what assessment he has made of whether charities are likely to close as a result of the withdrawal of Gift Aid from charitable membership; [147267]
(4) what timescale he envisages for the withdrawal of Gift Aid from charitable membership; [147151]
(5) what assessment he has made of the cost to charities of the withdrawal of Gift Aid from charitable membership. [147152]
§ John Healey[holding answer 12 January 2004]: Gift Aid is designed to promote giving to charity by individuals. It has delivered significant benefits to all fundraising charities. Donations to charities using Gift Aid are subject to rules governing the level of benefit that a donor can receive from the charity in return for a gift. If a gift exceeds these limits then Gift Aid cannot be claimed on the gift. However, under a special exemption introduced in 1989 and imported into Gift Aid as part of a wider reform in 2000, certain heritage and conservation charities are able to claim Gift Aid on membership subscriptions in the same way as they were previously able to claim tax refunds under Deeds of Covenant. Deeds of Covenant lasted for at least three years, meaning that a donor was required to have an ongoing commitment to a charity, but Gift Aid can apply to one-off donations as well.
A number of charities eligible for the special exemption are claiming Gift Aid tax refunds under so-called 'day membership' schemes. These schemes do not generate additional giving, but simply reclassify admission fees as donations on which Gift Aid is being claimed.
The Chancellor of the Exchequer announced in the pre-Budget report (Cm 6042) that the Government will amend the Gift Aid legislation to ensure that the special exemption applies as it was originally intended and not to these 'day memberships'.
This will mean that heritage and conservation charities will continue to benefit from the special exemption where a donor has an ongoing commitment to the charity, such as an annual membership, and these charities—like other fundraising charities—will continue to benefit from Gift Aid on other donations of money.
No estimate is available of the amount of money being claimed by charities which are taking advantage of this. Charities are not required to differentiate on their Gift Aid claims the amounts they are claiming for 'day membership' income from other amounts they are claiming. However, the purpose of this measure is not to raise revenue but to maintain a level playing field for all charities. It is unfair that some charities are claiming Gift Aid payments on what is in effect an admission fee when most other charities cannot.
864WWe will work closely with those charities affected to ensure that the change operates as intended and that the impact on them is minimised. The Government intend to announce final details of the changes in this year's Budget and introduce legislation in the next Finance Bill.