The Taxing Wealth Report 2024: restricting charity tax reliefs to prevent their abuse

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The latest in my series of proposals that will make up the Taxing Wealth Report 2024 has been published.

In this latest note, I consider the need to restrict tax reliefs for donations to charities in situations where they might be abused. This might apply most particularly to inheritance tax but could apply equally to income tax gift aid donations and to gifts to charities where capital gains tax reliefs are claimed.

The summary of this note says:

Brief Summary

This note proposes that:

  • Tax reliefs available for gifts to charities should be restricted in all cases, including for inheritance tax, where any of the following arise:
    • A material personal gain arises as a result of the gift, even if only by reason of overt publicity.
    • That some degree of control over the gift or the donated asset has been retained.
    • The charity favoured by the gift had not distributed more than 80 per cent of its revenues for charitable purposes in the five years preceding the donation or in the three years following it.
  • Measures to achieve these goals should be put in place as a targeted anti-avoidance rule for tax purposes.
  • The purpose for making these changes is not to raise revenue (although some savings in relief given may arise) but is instead to:
    • Prevent tax abuse.
    • Prevent the tax system from being used in combination with charitable structures to perpetuate the current unequal division of wealth within society.
    • Encourage good governance on the part of charities.
    • Protect the charitable sector as a whole from abuse, meaning that all well-managed charities gain from these proposals.


The reasons for this proposal are:

1. To reduce the incentives to avoid inheritance tax and other taxes by using the reliefs available for gifts to charities.
2. To close tax gaps.
3. To encourage charities to make use of donated funds on a timely basis.
4. To support good governance in the charitable sector.

The behavioural responses to this recommendation cannot be known for certain. What can be guaranteed is that the vast majority of donations to charities will be unaffected by this proposal. What will be affected are:

  • Donations from which the donor seeks to secure publicity e.g. by securing the naming of a facility in their own honour.
  • Donations where the owner retains control of an assets after the gift has been made e.g. as a result of gifting the ownership of share in a company into a charitable trust where control of the board of directors of that company is retained by the donee after the gift has been made.
  • Gifts to charities that are reluctant to make use of funds donated for charitable purposes, suggesting that they never had need for tax relief in the first place.

The measure is, therefore, an anti-abuse rule to restrict the availability of tax reliefs in all taxes, but which may well have most significance in the case of inheritance tax.

No estimate of tax savings that might result from these proposals can realistically be made.

The more technical aspects of the proposal are referred to in the supporting note.

Cumulative value of recommendations made

The recommendations now made as part of the Taxing Wealth Report 2024 would, taking this latest proposal into account, raise total additional tax revenues of approximately £105.2 billion per annum.

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