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Can Gift Aid reform break out of this Sisyphean state?

When I was at school, an enthusiastic teacher decided to educate us in the Greek myths. One was the story of Sisyphus, who irritated Zeus, the king of the gods, and was condemned in return to push a rock up a hill for all eternity. Once the rock got to the top, it would always roll down the other side, and off he went again.

This piece of classical trivia has given rise to one of my favourite words, Sisyphean, describing a long and continuous labour with no obvious end in sight. It’s a word that could be used to describe Gift Aid reform, a process which has been going on in one form or another ever since this tax relief was first granted, and appears no closer to its conclusion.

The new government has said it will present a general plan for reform in September, and has pledged to “make an announcement about Gift Aid in the next Budget” – although it’s vague on what that announcement will be.

It’s doubtful that this will be an end to the process, but there may be some progress. However, none of the more radical proposals suggested last year – such as opt-out, accounts-based or higher rate relief for charities – look like they will be considered.

The sector seemed to be moving in favour of a composite rate – a single rate of Gift Aid for all donations below £10,000, with a corresponding loss of relief for higher-rate taxpayers but with an exemption for big donors who really care about their tax relief. It doesn’t look likely that this will happen, either. The Treasury is worried about its cost; HMRC is worried about the potential for fraud, and in any case both departments have bigger fish to fry.

What we’re likely to get is a promise to streamline the system, which may be a better deal for the sector as there are some real victories to be won here.

First and foremost is a promise to allow charities to file and store Gift Aid claims online. Second is a donor database, which would allow donors to confirm that they agree to Gift Aid on all donations they make to any charity in the future. Unsurprisingly, however, HMRC has shown little enthusiasm for keeping such a database.

There are other possibilities, too, but there is also one certainty: there is a still a long way to go.