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Home / News and Insights / Insights / Charity tax reliefs: An update

The Chancellor’s Spring Budget announced the reversal (with full effect from April 2024) of a previous extension of UK charity tax reliefs to non-UK charities based in the EU and EEA that had been recognised as charities by HMRC. Post-Brexit, the stated policy objective is, essentially, to restrict UK charity tax reliefs to UK charities (defined by reference to being subject to the jurisdiction of the High Court in England, Wales, or Northern Ireland or the Court of Session in Scotland).

Although disappointing, the change does not sound the death knell for cross-border philanthropy. For example, it remains the case that a UK-registered charity can support charitable causes globally, and many ‘Friends of’-type charities are created to encourage tax-efficient donations by UK taxpayers, which the UK-registered charity can apply for (for charitable purposes) in support of a sister charity outside the UK.

With strategic global philanthropy needed more than ever, the firm hosted a panel discussion recently where the question posed was, ‘Does philanthropy require a radical rethink?’ and as part of the discussions, tensions between private philanthropy and government involvement were subject to lively debate.

The government incentivizes charitable giving, with a tacit acceptance that the charity sector fills gaps that the government can’t (or would prefer not to), but there are concerns that there should be more public involvement (beyond Charity Commission oversight) in private philanthropy, which is part-subsidised by charity tax reliefs. The tension is that many serious philanthropists set up programmes precisely for the reason that they can operate without government interference. In addition, in contrast to the often more short-term view of a government, philanthropists can work on a much longer timeframe to research, plan, fund, and solve problems.

What was clear from the expert panel was the range of opportunities out there for philanthropists to collaborate and achieve more together. At an individual level, we might donate to, say, food banks with a view to alleviating local hunger caused by poverty, but we can’t alone bridge the gap from immediate relief to understanding and tackling the root causes of poverty and social inequality. Finding solutions on that scale tends to come down to a few philanthropists at the very top level, but most are not in the Bill & Melinda Gates category with the funds to ‘move the needle’ on a societal problem on their own. There are, though, now growing philanthropy communities where those with significant funds to use but who need help on strategy and having an impact can come together to pool their funding or ideas (or both) for the common good.

Opportunities for philanthropy, both at home and internationally, abound.

As ever, the firm’s charity and philanthropy team can help with all philanthropic planning and governance.

This article was first published in our Primed International newsletter which provides monthly legal insights from our international team. Be the first to receive the next edition and subscribe here.

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