Arts Council England’s response to the Call For Evidenceon the simplification of Gift Aid

October 2015

Arts Council England’s mission is 'great art and culture for everyone' and we work to achieve this by championing, developing and investing in arts and cultural experiences that enrich people's lives, enabling new artistic developments, realising talent, and championing culture in public policy. As the national development agency for the arts, museums and libraries, we support a range of activities from theatre to music, reading to dance, photography to digital art, carnival to crafts. We support and invest in high quality arts practice and the best emerging practitioners whom we believe are the backbone of a dynamic creative economy.

In 2014/15 Arts Council England invested £851.8 million in arts and cultural organisations. A significant proportion of this investment went to National Portfolio Organisations and Major Partnership Museums.80%of these organisations are registered charities eligible for Gift Aid as are many recipients of other Arts Council England investment. In 2012/13 the arts and cultural sector had a turnover of over £15 billion and provided more than one in 20 jobs in the United Kingdom[1].Therefore, the impact of any changes to Gift Aid on the arts and cultural sector and the UK economy more broadly, should not be underestimated.

Arts Council England welcomes the level of detail in this call for evidence and is supportive of arts and cultural organisations who have responded.

We welcome the proposed simplification of Gift Aid, to allow arts and cultural organisations to incentivise giving and maximise the financial benefit of every donation.

We ask that flexibility is retained to ensure organisations are able to apply rules to suit the size and type of organisation. We would hope that unnecessary administrative burden, which might deter an organisation from accessing Gift Aid, is minimised.

We attach a copy of a letter sent to The Rt Hon George Osborne in February outlining the position of key umbrella bodies representing the arts and cultural sector.The responses in this letter remain relevant.

We welcome involvement in conversations on this matter and will submit a full response to the future consultation. We are keen to support further simplification and would be happy to further discuss sector-specific implications of any proposed changes.

For more information, please contact:

Marie-Claire Daly

Officer, Policy and Research

19February2015

The Rt Hon George Osborne Chancellorofthe Exchequer HMTreasury

Horse GuardsRoad

London

SW1A2HQ

Dear Chancellor,

We,theundersigned,verymuchwelcomethetaxreforms madeinrecentmonths for thebenefitofthecultural sector including theTheatreTaxreliefand Orchestra Taxrelief.

Followingonfromthis,wewouldalsowelcomefurtherfocus being given to Gift Aid.This isavaluablebenefit tocharities providinga tax-basedincentive for donors andencouragingincreasedphilanthropy.Taxincentives, although notthe primarydriver ofphilanthropic donations,caninfluence the extentandmanner of donations –anincreasinglyimportantsource ofincomeforarts andcultural organisations,requiredto diversifytheirincomein order tobecomemore resilient.

TakeupofGiftAidremainsshortof optimumlevelsamongst allareas ofthe voluntarysector andweare concerned thereisasignificantamount ofunclaimed GiftAidwithinthe artsandcultural sector.

Wewelcomethecommitmentshown byHM Treasuryto engagewith thesector in relationto GiftAidbutwewouldurge that further actionisconsideredinadvance ofyour Budget on18March 2015ahead oftheGeneralElection.

Weare aware thatthe CharityFinance Grouphasbeenworkinghard toimprove GiftAidover recentyearsandtheyhave producedfivekeyaskstobeconsidered aheadoftheGeneralElection.

Wearefullysupportiveofthefivepoints listedbelowandhavesoughttoprovide furtherobservationsfrom acultural perspective.

1.Reform theGiftAid SmallDonationsScheme.

Enabling anycharityregisteredfor GiftAidtoclaimthrough the scheme as wellas removingthematchingrequirementfor donations. Thegovernmentshould alsoconsider allowingcharities toclaimon non-cashdonations.

TheintroductionoftheGiftAidSmallDonations Schemehas been welcomed, however, take up amongstthearts andculturalsectorhasbeenvariable.We wouldlikeyou toconsider reducingtherequirementfor atwoyear historyof regular GiftAidclaims whichwe believewillencourage anincreasedclaimrate by

artsandculturalorganisations.

2.Support anewpromotional campaign toboost GiftAid.

Governmentshouldinvestinasector-ledcampaigntoimprove public awareness andunderstanding ofGiftAid.This buildsonHMRC’s researchwhichshows thatoneofthemainwayswecanimprove uptakeis throughmakingsure thepublic understandsGiftAidandits

value tocharities.

Wewelcome the progress achieved throughyour supportoftheGREATBritain Campaignwhichshowcases thebest ofwhattheUKhasto offertoinspire the world and encourage peopletovisit, dobusiness,investandstudyin theUK.Arts andculturalorganisations arecentral tothiscampaignandwewouldwelcome investmentinasimilarcampaignthatseekstoimprove publicawarenessof arts

andculturalorganisations ascharitiesandincreasesunderstanding ofGiftAid.

3. SimplifyGiftAid donor benefits.

Manycharities areput offbythecomplexityoftheGiftAiddonor benefit rules.Thegovernmentshouldwork with thesector tosimplify therulesandpotentiallyincrease therangeofbenefits thatcanbe

provided bycharities andstill receive GiftAid.

Wewelcome thecurrentconsultationbyHMRCregarding donor benefitsfollowing thepositionoutlinedinyour AutumnStatement:

2.82 Charitydonor benefits and GiftAid entrance and membershipfees–Thegovernmentwill continueand extendthereviewofdonor benefits launchedatBudget

2014 toincludeconsideration oftherulesforclaimingGift Aid onmembershipand entrancefees.Anupdatewill be provided atBudget2015.Thegovernmentwill alsowork with thesector on updatingthe guidanceandmakingit easier tounderstand.

There have been recentinconsistencies in decisions implementedbyHMRCwith regard tothis issue for the arts andcultural sector.This has highlightedtheneed for simplification ofguidelinestoreducethethreat ofimpactingonindividual philanthropy.

Weare aware thata group ofrepresentativesfromtheperformingarts sector has beeninvited tomeet withHMRC toputtogether asetof draftguidelines,including clarityaroundhowbenefits arevalued.Currentlybenefitsare valued onthe perceivedvalue bythedonor butit wouldbeadvantageous iftheywere valuedon thebasis ofthecosttothecharityin providingthebenefit.Your supportin progressingthis matterwould beappreciated.

Presentlybuildings that are charities can askcustomers tomakeadonationof

10% ormoreontopoftheadmissionpriceand thenclaimgift aidontheentrance price anddonation.

If this was extendedto theatresandother artsorganisationsthat arecharities it would meananadditional £4 donationontop ofa £40 transactionwouldbeworth

£15totheorganisation.

Webelieve thatifthe newgovernmentextended GiftAidtoattendance atcharities presentingarts eventsit wouldfurtherencourage philanthropyandprovidemuch

neededsupport.

4. Givehigher rate taxpayerstheoption of giving taxrelief to charities.

At present,higher ratetaxpayers thatclaimGiftAidhave toreceive thetaxbenefit themselves.The governmentshouldgive higher rate taxpayers theoption of passingthattaxrelief ontothecharities,

furtherboostingthevalueoftheirdonations.

We wouldfavour asimplification ofthesystem for higher ratetaxpayers andwould encouragefurther collaborativeworkwithHM Treasuryto takeplacewhichseeks to provideworkablesuggestions as tohowthis couldtakeplace.Itis known that higher ratetaxreclaimis underusedbydonors, due toacombinationoflack of awareness andperceivedcomplexity.

Arts and cultural organisationsappeal toaverybroadrangeofindividuals includinghigher ratetaxpayersandsimplificationwouldleadtoincreasedtax reliefreaching thesector.

5.ReviewcorporateGiftAid.

Corporate GiftAidwas reformedin2000to trytosimplifythesystem andincrease givingby companies.This has hadlimited effectand we believe thatcorporate Gift Aidshouldbereviewed and considerationgiven toallowingcharities toclaim GiftAidon

corporate donations.

Wewelcome therecentHMTreasuryconsultationonGiftAid and digitalgiving andawait theintroductionoflegislationto allowregulations tobemadewhichwill giveintermediaries agreaterroleinadministeringGift Aid(FinanceBill 2015).

Thesemeasureswill benefitthesectorsubstantially andparticularlythose artsand cultural organisationswhich havelimitedresourceandcapacitytoenablethemto maximiseGiftAidclaims ondonations received.

Yours sincerely,

Mark Pemberton

ChiefExecutiveofAssociation ofBritish Orchestras

Representingover175organisations.

MatthewTannerMBE

Chair ofAssociationofIndependentMuseums

Representing750membercharities.

AndrewJowettOBE

Chair ofBritishAssociation ofConcert Halls

Representing31members.

Caron Bradshaw

ChiefExecutiveOfficer ofCharityFinance Group

Representingover2,200members.

CarolineMiller

Director ofDanceUK

Representingapproximately1,600individualmembersand200companymembers consistingof theatres,dancecompaniesanddanceorganisations.

SharonHeal

Director ofMuseumsAssociation

Representingover7,500individual,institutionalandcorporatemembers.

DianeLeesCBE

Chair,National MuseumDirectors’Council

Representing39leadersoftheUK’snationalcollectionsandmajorregional museums.

RosemaryJohnson

ExecutiveDirector ofRoyal Philharmonic Society

SimonHebditch

Chair,SmallCharitiesCoalition

Representingover6,800members.

Kate PughOBE

ChiefExecutiveofTheHeritage Alliance

Representing99independentheritageorganisations.

Julian Bird

ChiefExecutiveofUKTheatre &SocietyofLondonTheatre

Societyof LondonTheatre(SOLT)representsapproximately190London-basedproducers,theatre ownersandmanagers.UKTheatrerepresentsapproximately270theatres,concerthalls,dance companies,producersandartscentresthroughouttheUK.

RobinSimpson

ChiefExecutiveOfficer ofVoluntaryArts

VoluntaryArtsprovidesa universalvoiceforapproximately63,000voluntaryarts groupsacrossthe

UKandIreland.

Cc:TheRtHonSajidJavidMP,SecretaryofStatefor Culture,Media andSport

[1] Contribution of the arts and culture industry to the national economy
An update of our analysis of the macroeconomic contribution of the arts and culture industry to the national economy
CEBR Report for Arts Council England