Clause 96 - Gifts of real property to charity

Part of Finance Bill – in a Public Bill Committee at 3:15 pm on 13th June 2002.

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Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Shadow Minister (Olympics and London), Liberal Democrat Spokesperson (Olympics and London), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister) 3:15 pm, 13th June 2002

I rise not only to support the hon. Gentleman's amendments, but to speak to the amendments in my name and that of my hon. Friend the Member for Torridge and West Devon (Mr. Burnett). Our amendments, Nos. 207 to 210, are somewhat broader than the amendments of the hon. Member for Arundel and South Downs, which focus primarily on works of art. Ours were suggested

by the Charity Tax Reform Group and would go further by granting relief to donations to charities for a range of chattels.

The amendments follow the same lines as the Government's moves in this and previous Finance Bills. The Government are to be congratulated on expanding tax relief for charitable donations and, as the hon. Member for Arundel and South Downs said, on what they are trying to do in the Bill. In reforming the tax system for charities, they want to focus on income by achieving greater levels of new giving. To a certain extent, they have been successful in doing that in the new tax relief for donations of securities, which is presumably why they are taking it a step further today. However, I should like them to pursue the total logic of their policy by including all the chattels that could be tax relievable under to the amendments.

Given that the amendments are along the same lines as Government thinking, why would the Government not accept the amendments? The hon. Member for Arundel and South Downs suggested that cost might be the answer. However, whether the cost were £5 million or greater, I do not think that that is at the back of the Government's mind because they have shown themselves to be extremely generous, over many Finance Bills, in encouraging new giving to charities—I make no bones about that. Compared with the Government's previous generosity, the extra provisions in the amendments are small. The Government must explain why they will not go the whole hog and give relief to the many variants of donations to charities.

In trying to answer that question, I wondered whether the Government were worried about administrative costs. Perhaps there are difficulties in making valuations of all the different assets that could be donated to charities. The hon. Gentleman talked about computers and vehicles. We could mention furniture, antiques, or a range of different items that could be gifted to charities, and tax relief could be granted on them. Perhaps the Government are concerned that lots of official time would be tied up in working out the value of those items to determine what the tax relief should be. I should be surprised if that argument would withstand much scrutiny, because in many other areas of tax administration, tax officials produce such evaluations, and they do so according to guidelines and standards. Therefore, I cannot see why that should be an overriding objection. Perhaps it would take a bit of extra work to find out how new evaluation techniques could be applied in this area, but I suggest that the work would be worth while.

There are added advantages of extending tax relief for such donations. Many assets that I mentioned—computers, scientific equipment, motor vehicles and so on—could be of great value to charities if they were donated, and if the number of donations increased. The route currently open to people—realising the asset, getting the cash and donating it on—would not be as valuable as giving the gift in kind. If one went down the route of realising the assets, capital gains tax might be payable, the administrative costs and hassle involved would be a significant barrier and the value of

the cash might mean less to the charity in terms of benefits than the asset itself. The second-hand value of the asset might be more beneficial to the charity.

I urge the Government to consider carefully the development of this interesting series of tax reliefs for charitable donations. They have heritage importance, as the hon. Member for Arundel and South Downs pointed out, in respect of works of art. There are many other gifts in kind, such as antiques, which would have heritage value for the nation. Moreover, by encouraging donations and the reuse of assets, there is an environmental benefit: the assets are not thrown away; they are given to voluntary bodies and charities that can make good use of them for the wider community. Thus an environmental benefit underlies the proposals.

If the Minister does not accept the amendments, which I somehow doubt he will, it would be nice if he could assure the Committee that the Government will think carefully about the amendments tabled by the hon. Member for Arundel and South Downs and by my hon. Friends, and see whether in future Finance Bills, they might seek to widen this generous tax relief a little further.