Written question asked by Lord Beecham (Labour), in the House of Lords. It was answered by Lord Sassoon (Conservative) on Thursday, 2 December 2010.

Charities: VAT

Question: To ask Her Majesty’s Government what steps they will take to relieve charities of the estimated additional burden of £150 million per annum which will be incurred as a result of the pending 2.5 per cent increase in VAT.

Answer: The increase in the rate of VAT is necessary to sustain public finances and ensure long-term fiscal stability. The charity sector benefits from over £3 billion a year in specific tax reliefs, including nearly £1 billion in gift aid and over £150 million in respect of specific VAT zero rates. Furthermore, the Government have established a transition fund of £100 million to help civil society organisations that have seen large reductions in income from public service delivery contracts.

Secondary information