The tax man loveth a generous giver

April 15, 2012

I must be missing something in the row over the taxation of charitable donations.

  • If I’m an ordinary tax payer and I give £10 to charity, then the government boosts my donation by giving the charity £2.50 (notionally the tax I paid when I earned the £10).
  • If I’m fortunate enough to earn enough to pay tax at a higher rate, then the government boosts my donation by the same £2.50, but then gives me £2.50 back to do with what I like. Why?
  • and if I earn even more and pay tax at 50%, then I would get £3.75 back. Again, why?

One solution to the current political row would be to give this extra £2.50/£3.75 directly to the charities concerned. Bodies such as the Charities Aid Foundation could be authorised to handle the administration, which would also solve any privacy issues.

This would answer the complaint that somehow the government is robbing charities. Or am I missing something?