Regular readers will know I hold no brief for the Conservatives, let alone any other party. And regular readers also know my view that the tax burden in this country is far too high because the administration cannot resist spending grotesque amounts of our money on non-essential wheezes that all too often deliver nothing close to taxpayer value. But while I resent the political class and much of what it stands for, I have a particular disdain for the useless hacks that pass for journalists in this country.
The fourth estate likes its storms in tea cups and the near saturation coverage in recent days of the limits on tax relief for charitable giving by wealthy people is the latest receptacle-centric tempest to catch the goldfish-like attention span of the news media.
Numbers have been chewed over. Philanthropists have been given unchallenged platforms from which to attack the budget measure. Labour has been given an open microphone to hurl invective at the coagulation administration. Fair enough, many might say.
But in all the column acres of newsprint and hours of pontificating on the airwaves, I have yet to hear one reporter explain to the public that wealthy people are not being stopped from giving money to charities. As much as I resent tax grabs, all the Conservatives and Limp Dims have done is say that wealthy people will not be able to reduce their tax burden quite so much simply by giving away shed loads of cash to various causes.
The whining and pontificating of charitable donors and spokesmen of various charities (faux and otherwise) whipped up by the media, is entirely self serving. These are the very same people the media has been attacking as fat cats and troughers for not paying their ‘fair share’ in tax. Yet the media now supports these people because they supposedly want to give away a fortune to good causes, but will now have to pay tax when doing so above certain levels – all because of the evil Tories and their Limp Dumb stooges apparently.
It really says something about how biased and useless our media is when they are too stupid or simply refuse to put the story into proper context for the public. What these wealthy donors are saying is they will not give as much money to charity because in doing so there isn’t as much in it for them. Read that again. These wealthy donors are apparently desperate to give money to good causes, but many will now not do so to the same extent because they will have to pay tax on some of what they earned.
The only rational conclusion that can be drawn from this wailing and gnashing of teeth is that the real motivation for many donors giving money to good causes was not a desire to do good, but a desire to cut the amount they pay in tax. Good for them, I say. If there is a loophole that enables someone to withhold some of their money from the kleptomanics in Whitehall, then they are entitled to use it. But they should be honest about their motivations and people should also understand the media is hiding the reality of these vested interest donations in order to service some other agenda.
This is just yet more evidence that we cannot trust anything the media says.
Autonomous Mind 
isn;t it more that rich people rather give money to charities than the government? say I earn £1M if I can give half of it to a charity and it gets £500,000 without me having then I have managed to channel my hard earn cash towards starving children &c &c rather than the government.
If you cap the rebate then I’d give say £300,000 to the charity and the government would get the £200,000 it cost me the same its just that the charity gets less.
The unending stream of injustice becomes tiring news for those who once had hope in a vision of the Brave New World, to be realistic as a social phantasy, what else can the population of Great Britain expect from the War Lords of Whitehall?
The population experiencing exhilaration of Britain surviving WW2, as some may remember, King George V1 standing on the balcony of Buckingham Palace, in 1945, the victorious excitement from the crowd as the King gestured with a wave bestowed upon his subjects, the realization and dawning of rationing yet to be internalized, to pay America for the privileged of the British having been saved from a destiny that appeared ominous.
This short lived exhilaration coming to the end in the late1960s, as the forces of Establishment frustrated by a social menace of working class aspirations, the Elite perception suffering the loss of enjoyment of the privileged few, the superior class had traditionally enjoyed compounded by the enjoyment of a subclass suffering, salt in the wounds so to speak.
The question is, what is the role of establishments future aspiration for itself and most importantly the public domain? security? confirming military and policing expenditure, the threat of the enemy within and without not only has a congealing effect on the Commoners, also substantiating and conferring the ruling tribal leaders, and confirmation at least symbolic power, this endorsement of leadership as existing, the initiation however temporal and dark this black hole of Establishment, sucking in all what exists within its orbit of death, exhibits a trajectory equation of definition, perceived as useful to the inept and the Lost for a time, now at least able to follow the blind, this precarious safety of those who albeit are also in the Grand Illusion of a space/time continuum, unable to know any better for the Common Wealth or Good, locked in to the historical gravity syndrome, having no other choice or possibility than to destroy the Planet and its resources, and the destruction of the inept that have become victims of friendly fire.
Giles Bradshaw
I take the point but would be intrigued to learn how much of the £500,000 (or £300,000) in your example ends up with “starving children” etc.
Call me an old curmudgeon but my bet would be that quite a lot will go to dodgy “charities” that maintain villas on Mustique or yacht marinas in the Cayman Islands or some other scheme. Don’t know – but wouldn’t be at all surprised.
But much more will go to outfits like Oxfam, Greenpeace, WWF and the rest of them to boost their Climate Change scam activities.
I agree with AM. Are these top end ‘looters’ or aren’t they? And is it right that they can effectively buy their way out of the tax system?
As usual the best solution to this “problem” is also the simplest. Just don’t give tax relief for charities. Let them raise what they can without help from the taxpayer. Save a few more pounds by abolishing the Charity Commission.
Small thought experiment:
Say the potential donor was in a position to determine the mechanics of his payment (think, say doctor in private practice) and the asked for say 50% of his fee to be waived by him but donated to a charity. The net result is the same as if he took the whole fee and gave 50% to charity, utikising tax relief. Would this be tax avoidance?
In this particular fight, I am somewhat puzzled. But I think it helps to follow the money, and also to follow the motivation.
If the extremely rich donate to charity, they do not then have the money they have donated: so why should they be taxed on any of that donation: it is no longer income for them.
Well, there is a case for saying they benefit, by deciding which charities get that money that was theirs. [And this is a benefit beyond any corrupt scheme in which the cooperation is required of the recipient charity.]
The converse is equally true.
The politicians want the money, lost to tax by the current policy on charitable giving, so they can give it to their favourite causes (through government spending). These causes being, for the most part, less deserving than is true charity. [In addition, all those who work (directly or indirectly) for government are keen on this, as they benefit from an increase in government spending.]
So, we must perhaps view on who should make the decision on spending that money, based on the quality of the charity in the giving. Who is most charitable: government (being politicians and paid others under their control) or extremely rich individuals with a charitable frame of mind?
Finally, there seems to be this case, from the government side, that the extremely rich (by giving some portion of money all to charity and not one penny of that portion to government) are stealing from the taxpayer. In so far as there is any logic in that argument, that logic seems to be that all money belongs to the taxpayer (or perhaps their agent: the government); only that money released by ‘the taxpayer’/government becomes owned by the person who earned it. That is the creed of communism. Is it also the creed of the Conservative Party and the Liberal Democrat Party?
Best regards
– probably be classed as TAX EVASION unless he/she donated time without conditions, as the doctor would be getting their “benefit of his chosen charity getting cash” in return for work. It’s similar to when a worker gets a benefit like Wimbleton tix instead of cash, it’s counted as income and increases your tax.
– In practice the HMRC doesn’t chase small amounts as it’s much more effective to use their time to chase cases where many millions are been evaded.
– I like at festivals when they ask you to give a donation instead of paying. No it is not a donation it is a charge ..and should be taxed.
– Lost in all this is that the top tax rate has been reduced so some rich people have some more cash to donate.
– In a worst case scenario charities might lose a couple of %.
What’s the actual cash “(2008/09) higher-rate taxpayers claimed £280m in tax relief on donations” ..seems small.
– What charities are they giving to .. publicly useful or their own pet project or propaganda & political lobbying etc.
– If we think elected governmet is bad I a suspect if we looked closely at the way unelected charity managers manage money we’d be horrified.
– Charity is an inherently inefficient way of providing services, they waste so much of their resources fund raising, then once the mega charities have conned your senile relatives into donating a huge legacy they refuse to pass enough of the money to their local branches, that why you are accosted by RSPCA chuggers on your local high street. Other charirities also sit on vast piles of property & investment assets many times more than their annual expenditure.
…. much of that cash is then used for lobbying & political purposes like pro windfarm propaganda. (indeed some people say RSPCA was heavily infiltrated by “anti-farming animal rights extremists”
– So you can pay tax or found your own charity. (Supposidly some people found a charity in Rumania then hire themselves to work for that charity.)
– I didn’t hear the charities praise the gov who introduced the 50pc tax with the same volume they complain now
– Interesting how out entertain & propagandadize rather than educate news services are a bit misty about the figures.
I think if I earn £2m, I can pay 50% tax & I get 1m & gov £1m,
but if I decided to donate £1m to charity, the gov would give the charity £0.25m plus HMRC will add an additional transitional relief of 3%. The gross donation would be £1.25m & I’d also get tax relief of (50-20)% = £0.375m, so I’d end up paying 50% tax on £0.625m=£0.3125m
so I get £0.6875m, charity £1.28m and gov £0.0325m
– Note how the gov gets almost nothing & I could rejig the figures, by donating less so I could get close to my original £1m, my Save the Toffs charity most of the rest & the gov about £0.1m .
I agree. One minute the media are complaining about (supposedly) lowering the tax an the wealthy – the next they are complaining they are removing a tax subsidy.
The press are sh!te
oops – no wonder the press don’t do numbers it’s too easy to make a mistake
I took the tax off the £1m I had left when I should have taken it off the £2m I started with. So after relief taxed not on £0.625m, but 50% of £1.625m=£0.8125m
so I get £0.1875m, charity £1.28m and gov £0.5325m
so still me & my chosen causes have almost 75 % of my income, If I donate all income after tax I don’t get the governments take to zero, but rather 23%.
– The new law limits relief to 25% of income with a £50,000 limit, so I’m now taxed on £1.95m so most of my tax bill is now £0.975m
so I get £0.025m, charity still £1.28m and gov £0.695m
– If I want to get my cash back to £0.1875m I have to cut my charity donation by about £0.1625m ie 16%
“the tax burden in this country is far too high because the administration cannot resist spending grotesque amounts of our money on non-essential wheezes”
Sorry but that statement is cobblers. The reason the tax burden is so high is because we as individuals and as a population consent to it!
The only rational conclusion that can be drawn from this wailing and gnashing of teeth is that the real motivation for many donors giving money to good causes was not a desire to do good, but a desire to cut the amount they pay in tax.
Was it ever otherwise for “philanthropists”?
People seem to be making this tax-deductible charity giving awfully complicated – I don’t understand a single word of Mr Wexford’s post. Seems to me that the rich and medium rich should pay their taxes first, then give to charities. After all, they expect to benefit from us having the resources to defend the realm, keep the peace, educate children and cure the sick – don’t they? I think that a tax concession – maybe at basic rate – is a good idea to encourage support for our charities, but absolutely it should apply only to UK registered charities.
Vernon E
Why, oh why do press and media not report on the vast number of charities and check if they are really contributing to the needy? Do we really need thousands of registered charities? Press and media give Oxfam and Save the Children as examples of losing millions, yet fail to investigate validity of all charities and how they spend their money. Many are there just to allow the rich to funnel away a money pot to be used later.
Ordinarily, I’d agree with backofanenvelope: get rid of all charity tax relief, not because I hate charities, but because simpler taxation is always better. The trouble with that plan is that you’d end up with a lot fewer charities… and they aren’t all big quasi-state organisations like the RSPB, Oxfam, and Greenpeace. Indeed, they’re the ones most likely to survive such a measure; it’s the smaller ones that would go to the wall.
The overall tax burden is much, much too high. Charity tax relief is a tacit admission of that. And, Bill, I never consented to anything.
Anyway, the real story here is media inconsistency. They want to have it both ways. Anything for a story.
A few points,
(a) great post AM
(b) the MSM have been doing this for almost every policy/consultation/review that the Coalition are doing; agree with the politics or not the public deserve to be told the truth or at least the news in context; a ‘scandalous’ policy suddenly turns out to be OK when the public actually hears what it means (not what the lying headlines have told him/her – the ‘granny tax’ is a classic example.
(c) would be nice to see how many of these charities aid/promote in some way the donors or their families/businesses themselves. Lots of fake charities out there.
P.S. John Payne – a couple of comments up – has already posted about the point I made in (c)
Have to say I disagree on this one, AM. The person giving to charity pre-tax is no better off because of it. They still lose the money. But instead of it going to the state, some of it goes to chairty.
Here’s Tim Worstall’s take on it:
http://timworstall.com/2012/04/17/pollys-swallowed-the-story-then/
Couldn’t agree more.
Three scams:
1 misuse of charity funds by charities including suspect loans or investments and monies transferring overseas or back to the original donor
2 manipulation of the values of donated assets providing excessive relief to the donor and no benefit to the recipient charity
3 false claims to repayment by charities and people attempting to have charity records created with a view to claiming tax repayments to which they are not entitled
A Case History:
“The family, very early on in the frauds, also established a charity that was said to operate for the benefit of the wider Islamic community. The charity was controlled by the family members, as trustees and they submitted accounts to the UK Charity Commissioners showing receipts of less than £10 000. The family members however were using the Charity as a cover to launder the proceeds of their tax evasion.
“HMRC were alerted through intelligence that the charity was being used by the family for uncharitable purposes i.e. to fund their own expensive lifestyles. The Investigation into the various bank accounts in the charity name and managed by the family members showed that in excess of £2.5 million had been deposited. All funded through undisclosed income of the businesses directly diverted in the banks. Several of the bank accounts were held offshore in the charity name.”
Click to access 42232037.pdf
Not to mention banks and their charitable trusts which give nothing to charity.
And finally what on earth is Breaking the Climate Deadlock.