Clause 50 - Gift aid: giving through self-assessment return

Part of Finance Bill – in a Public Bill Committee at 3:30 pm on 14 June 2012.

Alert me about debates like this

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury) 3:30, 14 June 2012

I hope to ask a few questions of the Minister so that we can make good progress, but the earlier point about being able to set out on the record broadly what the clauses do is important. I do not intend to spend too much time on that, but, in summary, clause 50 repeals the self-assessment donate scheme for self-assessment taxpayers to direct HMRC to pay any self-assessment tax refund to a charity of the taxpayer’s choice. If appropriate, gift aid can also be claimed on the donation. The scheme will be withdrawn for repayments of tax due in tax returns for 2011-12 and subsequent years and for any repayments made in respect of earlier tax years on or after 6 April 2012.

The Government have stated that the measure supports their objectives to simplify the tax system and to direct resources to encourage charitable giving to more cost-effective methods. The arguments for that included that the scheme was little used— given the number of people who fill in self-assessment returns, I would question whether people were made aware of it. Back in March 2011, when the proposal was first announced, an article in relation to Budget 2011 in The Guardian stated:

“Hidden away in the text is the abolition of Self-Assessment Donate (SA Donate), a little known scheme allowing donors to give to charity through their self-assessment tax return.”

The article continued with what is perhaps the general view:

“Not a huge loss to the sector, but something which will need to be looked at in terms of offering new ways for high rate taxpayers to give all of the tax paid on a donated amount to the charity.”

I hope that the Government will want to discuss that.

Will the Minister give us an update on the progress of the online claims system for gift aid and when it is expected that that system will be put in place? One argument that was made in favour of doing away with the self-assessment donate scheme was that a new scheme would be put in place. If that scheme is not ready to go—I am happy to take an intervention if she wants to deal with that—will she explain why this particular self-assessment donate scheme was withdrawn without that firm provision being in place? What impact assessment was made? Her comments about the importance of consultation and working with the various sectors were welcome, so will she explain exactly what assessment was made of the impact on charities that may lose out on donations when the scheme is withdrawn? Does she recognise that although most of the charities that have benefited from the scheme were the so-called top earners—the 15 big charities at the top of the league, I think—some were not? For such smaller charities, the loss of income may have a negative effect.

One of the Government’s other reasons for withdrawing the scheme was that it needed an extensive upgrade to safeguard it from fraud. What assessment have they made of how much was lost in fraud as a result of the scheme? How much do they think it would cost to safeguard against fraud? Will the Minister respond to those questions and give us that information? Again, we do not oppose the clause, but it is important to have the Government’s thinking clearly set out on record before we move on.