Assessing and easing the tax burden on charities

This project resulted in the first ever comprehensive study of the impact of taxation on charities. The Charity Tax Map offers a comprehensive study of the interaction between the tax system and the voluntary sector, as well as detailed case studies of individual charities. 

The Charity Tax Map:

• gives charities details of the 18 different taxes to which they could be subject
• looks at the associated compliance requirements
• identifies the various tax reliefs available to charities
• sorts the taxes and reliefs according to the activities charities undertake in a unique Charity Tax Map matrix
• presents a study of the cost and impact of taxation on the sector informed by a survey of sample of different types and sizes of charities that is representative of the sector as a whole
• provides twelve detailed case studies outlining the particular impact of tax on the individual charities
• provides charities with a valuable tool to ensure they know which reliefs and taxes apply to them
• helps charity trustees assess when they need to take professional advice.

Methodology
31 charities were asked to complete a detailed questionnaire about their tax affairs, and the costs of administering and complying with each of the taxes. The work also incorporated responses from an earlier survey about irrecoverable VAT to which 87 charities responded.

Key findings of the Charity Tax Map show:

• that the number of taxes and the extent of their impact on any particular charity will depend entirely on the size, scope and activities undertaken by that charity
• that the compliance burden faced by charities in administering taxes often seems disproportionate to the taxes collected
• the diversity and complexity of charity taxes, reliefs and related compliance that would benefit from simplification.

Next steps

CTG intends to develop and repeat the Charity Tax Map survey to gather more information and to identify trends in the charitable sector. Over time this will allow CTG to monitor trends in the total level of taxation faced by the sector.

In January 2013, further funding was awarded to enable CTG to develop a dedicated website for the updated version of the Charity Tax Map