Tax concession for charities to be reduced

Date: 9th July 2009

HM Revenue and Customs (HMRC) are to alter the conditions of a VAT concession concerning charities, according to Accountancy Age.

As of January 1st 2010, charities will be exempt from VAT payments on the purchase or construction of buildings provided 95 per cent of that building is used for charitable purposes.

Buildings currently qualify for the concession if 90 per cent is used for charitable purposes.

It is suggested that this five per cent increase could cause a backlash from charities angry at the financial implications of the change and the lack of warning the government gave before announcing it.

Keith Hickey, chief executive of the Charity Finance Director's Group, said: "The situation will now only become worse. We're confused as to why HMRC should have changed their interpretation of 'solely' charitable use from 90 per cent to 95 per cent."

He went on to say that the alteration suggested the government was got giving charities the prioritisation they required and that the changes would be at a "significant cost to the sector".