Veterans are calling on Rachel Reeves to close a multi-million pound tax loophole to stop fundraising sites “creaming off” money meant for war heroes. They are furious that some fundraising platforms, including JustGiving and Crowdfunder, charge commission on Gift Aid donations – in effect siphoning off money earmarked for veterans in order to boost corporate profits.
Last year, UK charities missed out on more than £7.5 million through this so-called “giving tax” taken by sites like Just Giving, Crowdfunder and Localgiving – a 5% fee levied commission on Gift Aid. The Chancellor has been urged to take action and ban the practice.
Captain Rupert Gather, Chairman of the Royal Scots Dragoon Guards London Veterans Association, who served in the Gulf War said: “Our veterans deserve more than just our gratitude – they deserve our full support at every level.
“The current system, where fundraising platforms are allowed to cream the top off Gift Aid, is a disservice to those who have given so much and stops money going to vital veterans causes. This is essentially a tax on giving and needs to be looked at and reformed.”
His rallying cry comes as new research shows that two-thirds of Britons think the government should close the loophole.
According to the polling, compiled by advisory firm Strand Partners, 80% of people say these sites should be more transparent about any commission they take.
It comes on the 81st anniversary of D-Day, when donations to veterans causes is among their highest, and at a time when many armed forces charities are struggling to survive. A slump in donations in recent years has put a strain on the finances of many leading charities, with Combat Stress – a veterans’ mental health charity – reporting a 10% loss of income last year.
Overall, the number of armed forces charities has reduced by one tenth since 2017. Originally introduced in 1990, Gift Aid is a government scheme that allows charities to claim an extra 25p for every £1 donated, at no additional cost to the donor.
Designed to boost charitable giving, the scheme enables charities to reclaim the basic rate of tax on donations.
However, concerns have been raised that platforms take a commission on Gift Aid donations.
According to their website, if a donation is eligible for Gift Aid, JustGiving will claim Gift Aid from HMRC on behalf of the charity, but they will deduct a 5% commission before passing on the remaining amount to the charity or fundraiser.
Gift Aid commission remains unregulated and campaigners are calling for the government to step in to avoid fundraising sites exploiting this loophole.
British generosity has moved online in an increasingly tech-driven world, with donations increasingly made via social fundraising platforms, but new analysis shows the extent to which some fundraising sites are taking advantage of their position.
The Treasury has been contacted for a comment.