Camilla Swift

What does the charity sector want from Brexit? A clean break and tax freedom

What does the charity sector want from Brexit? A clean break and tax freedom
Text settings

When it comes to Brexit, for many organisations it seems to be all doom and gloom. Yes, plenty of individual Brexiteers are still glad that they voted to leave the European Union. But the uncertainty that still looms over the UK’s future in so many areas – trade, farming, immigration and more, means that in many sectors, Brexit is seen as a negative.

There’s some good news for Leavers today, though. The Charity Finance Group (CFG), which provides support for finance professionals working in the charity sector, has published a new report entitled ‘A Brexit that works for everyone’, analysing what would be the best option for Britain’s charity sector.

The answer, according to the report, is a ‘clean Brexit’, whereby Britain leaves both the Single Market and the EU customs union – as this would allow the Government the freedom to set tax rates. As Caron Bradshaw, the organisation’s Chief Executive, said: ‘The voluntary sector has been hindered in the past by VAT rules and state aid and now is the chance to overcome this and change the regulatory environment in which it works.’

The charity sector could still benefit from leaving the EU with a ‘less clean’ Brexit – but the government would have to negotiate a deal whereby the UK has complete freedom to change VAT rules and allows us to reform State Aid, among other things. At the moment, the CFG says, one of the biggest burdens facing the charity sector is irrecoverable VAT. Many people might think that charities are ‘tax free’, but an estimated £1.5 billion is given to HMRC by the charities sector each year. Freeing up this money would allow charities to employ more staff and do more good deeds, and the CFG’s own polling shows that 83% of the public agreed that donations to charities should not be taxed. If it means losing out on £1.5 bn a year though, the taxman might not agree.

There are many people who think that the UK should negotiate as hard as possible to remain in the Single Market post-Brexit, and who won't agree with the CFG's call for a 'clean Brexit'. But it is at least good to see that some people and organisations have moved on from arguing about whether or not the vote to leave was the right one, and are trying to build positives from Brexit.