Friday, 21 January 2011

Leeds councillors back VAT exemption call for charities

Councillors in Leeds are calling on the government to exempt charities from paying value added tax (VAT) on their purchases.

A motion, proposed by the executive member for housing, Councillor Peter Gruen, was approved at a meeting of the full council this week.

VAT went up to 20 per cent from January 4, but Councillor Gruen is concerned about the negative effect the rise will have on charities.

He would prefer that they are allowed to keep the money they currently spend on VAT so that they have extra resources available to expand the good work they do.

He said:

“A two and a half per cent rise in VAT is hard enough to bear for anyone, but charities will be hardest hit.

“Voluntary organisations play a vital role in the fabric of society – so the council needs to do all it can to support them.

“I hope the government listens and removes this tax burden for charities.”

Currently, there are special rules for charities regarding value added tax.

Some purchases are entirely exempt, others attract a discounted rate, but many mean the full rate has to be paid.

But – the regulations are complicated and do not cover all not-for-profit groups.

For instance, some types of advertising and marketing attract the full VAT rate. Charities don’t get a discount on the tax for fuel for their vehicles either.

Councillor Gruen added:

“The complexities of the VAT rules are easy to see – but removing this tax obligation would bring immediate benefits for charities.

“Voluntary organisations across the country – not just in Leeds – would be better off as a result.

“I urge the government to listen to our call and take action.”

A letter will be sent to Chancellor George Osborne to explain the council’s views.

For media enquiries please contact:
Andy Carter, Leeds City Council 0113 395 0393