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15 March 2018

Consultation launched on whether tax treatment of charities needs reform

The Charity Tax Commission has launched a consultation seeking views on whether and how the tax treatment of charities - estimated to be worth around £3.7bn a year - needs to be reformed.

The review, the first systematic look at charity tax reliefs in over 20 years, will examine the role charities play in society, and seek to identify ways to improve the efficiency and efficacy of the current system.

Epilepsy society's chief executive, Clare Pelham is one of a board of six commissioners  who will be analysing the  existing system and making recommendations for the future.

Call for evidence

The commission’s 16-week call for evidence, launched today, invites submissions from anyone with relevant knowledge, expertise or experience of the system of charitable tax reliefs in the UK, including charities, donors, academics, think tanks, representative bodies, accountants, philanthropy and financial advisers and tax professionals.

The commission will look at the full range of taxes and tax reliefs that charities and donors are subject to and benefit from – including business rates relief, social investment tax relief, gift aid, VAT exemption and inheritance tax relief. In particular, the commissioners are interested in receiving views on the extent to which current system directs the activities of charities and encourages certain behaviour.

How charities spend money

Against a backdrop of increased scrutiny of how charities spend public money, the commission is also seeking views on ways to increase transparency without significantly increasing the administrative burden on charities.

The call for evidence will close on Friday 6 July. Alongside the consultation, the commission will also be holding a series of public evidence-gathering meetings across the UK during the consultation period.

Sir Nicholas Montagu, chair of the Charity Tax Commission, said: ‘It's 20 years since the last review of how the tax system treats charities, and a lot has changed since then. So it's time for a fresh look, and we want to hear from a wide range of people with experience and expertise in the field about what changes they think are needed. This is not about throwing money at the sector. It's about using the public money that's already there to make the system work more effectively for charities and their beneficiaries.'

Download the call for evidence template and find out how to submit.

Read Sir Nicholas Montagu's blog about the consultation.

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