Claudia Mendoza: Policy Focus - 2012 Budget

JLC’s Head of Policy and Research Claudia Mendoza, explores the potential impact of the recent Budget on our community

In his recent Budget, George Osborne announced that from April 2013 tax relief on charitable donations will be capped at 25% of an individual’s income, subject to a floor of £50,000 reliefs claimed. Someone with an income of £1m will be able to claim up to £250,000 of uncapped reliefs. This has potentially serious implications for charities which benefit from very large gifts and is likely to have disproportionate impact upon the Jewish Voluntary Sector which depends heavily upon a small number of large “givers”. Reducing the “cap” on the offset from 100% to 25% of income will impact on the level of donation due to the new tax leakage. We estimate that around 70% of top donations (by value and volume) to major communal charities are from the same sources. Furthermore, initial feedback to the proposals from our members indicates that often, without tax relief a donation will not be made. Many also stress the negative impact of eroding the clarity and simplicity around donations. In our recent policy paper ‘The Big Society and the UK Jewish Community’, we warned that the backdrop of public spending cuts, drops in voluntary donations and a tightening regulatory environment for faith-based charities represented a serious risk to the ability of the sector to play the role that Government envisages. The proposed cap may well become a tipping point in this regard.

We welcome the Government widening its consultation to include charities themselves however we believe that the plans must ultimately be scrapped. JLC Vice-President Lord Fink voiced concerns in the Budget debate in the House of Lords. CST Chairman & JLC Trustee Gerald Ronson attacked the proposal in his address to Government Ministers at the Big Society Forum. Following a meeting of CEO’s of JLC member organisations, it was decided that the community will work through the broad national third sector coalition that is opposing this change.