Could lifetime legacies fit the bill if Gift Aid reform fails to satisfy?

In the very near future, a group of third sector bodies will put forward a series of recommendations to the Treasury for Gift Aid reform.

Sadly, these look likely to be relatively modest, compared with what sector figures once hoped to achieve. And as a result, some sector figures are looking around for other models they can use to improve tax reliefs for giving, and it looks like lifetime legacies might fit the bill.

The lifetime legacy is a type of giving that has existed for several decades in the US. A donor decides he wants to leave something to charity, but is worried about income when still alive. So he bequeaths the capital, but keeps some rights to the income. If he gives cash, he receives income from it, typically 5 per cent a year. If he gives property, then he can carry on living there. In either case, there’s no tax liability to the donor or the charity.

It’s most commonly given through something known as a charitable remainder trust, and it’s now simplified to the extent that you can download a document, fill it out, and send it off.

Donors surveyed here seem keen on it. And charities here like it because it offers certainty of income, and an asset they can borrow against. A new campaign has attracted a wide range of support among legal firms and umbrella bodies. And there’s likely to be little cost to the exchequer.

However it has proved impossible to introduce the necessary legislation here – essentially, campaigners say, because of a “can’t-do” attitude on the part of HMRC.

It sounds like a familiar tale. This idea would take some working up from civil servants, some legal expertise, and some time and effort from civil servants. It presents a couple of potential problems, including the potential for abuse, which, the US proves, could successfully be ironed out. All of this is doable. But little is happening.

It’s essentially a question of political will. If any of the big guns in the cabinet takes a liking to the idea, it will go forward. Otherwise, no way José.

The sector is already mustering its considerable powers of lobbying to make it happen. It sounds a concept worth backing.