Tax Changes Could Cost Churches Millions

CUTS to the basic tax rate next month mean that churches and charities could stand to lose out on millions of pounds.

Since 2000, charities have been able to reclaim an extra 28p for every £1 given under the Gift Aid scheme, earning good causes millions of pounds extra. But on 6 April this year, the Treasury is cutting basic rate tax – which means that this windfall will drop by 3p to 25p in every £1.

While the tax cut will be good news for most individuals, it is not so good for churches and charitable organisations.

The diocese is asking those who donate under the Gift Aid scheme now to consider giving a little bit more to compensate for the tax cuts.

‘Many – though not all – taxpayers will have more money in their pockets as a result,’ says Robin Brunner-Ellis, Christian Giving and Funding Adviser for the diocese of Oxford.

‘But there’s a danger that churches and charities will miss out unless people adjust their giving to reflect the changes.

‘We estimate that churches across Berkshire, Buckinghamshire and Oxfordshire alone stand to lose as much as £400,000 between them.’

This could mean cuts to vital mission and outreach work within the community, setbacks in repair programmes for church buildings and an even harder struggle to pay the running costs, especially in smaller parishes.

To compensate for the change, people are only being asked to increase their giving by three pence in every pound. So if you currently give £10, to compensate for the tax cuts, you could consider giving £10.30.

To highlight the issue, Robin is suggesting that churches hold a special ‘Giving Sunday’ this year – ideally on 6 April 2008 when the new tax year begins.

Later this month he will be sending parish treasurers leaflets which set out the changes, and suggesting they are distributed to all parishioners. He will also write to clergy with ideas for prayers and resources to help focus on stewardship and giving.

‘A major change such as this presents us all with a challenge and an opportunity to think about our giving to the Church and to other charities,’ he says.

‘Churches may like to include a thanksgiving for gifts given at their Pentecost services five weeks later in recognition of God’s gift of the Holy Spirit.’