Query

A place to discuss the issues relating to the proposed change in the national CTC’s structure.
jabbs
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Query

Postby jabbs » 3 Dec 2010, 12:17pm

This is my first pitch at the debate so I might be missing something. Does the CTC mean to put itself into the same bracket as Age Concern or Oxfam? My take on Charities is that they exist for the benefit of disadvantaged groups such as the sick or needy, not fit outdoor types like us or the Ramblers Association.
I myself Have the good fortune to be a fit, active, cyclist, certainly not a deserving cause for charitably minded people. If they are going to donate money I would sooner see it go to the RNLI or Cancer Research

John Catt
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Re: Query

Postby John Catt » 3 Dec 2010, 9:55pm

Hi Jabbs,
jabbs wrote:This is my first pitch at the debate so I might be missing something. Does the CTC mean to put itself into the same bracket as Age Concern or Oxfam? My take on Charities is that they exist for the benefit of disadvantaged groups such as the sick or needy, not fit outdoor types like us or the Ramblers Association.

Charities exist for those things but have always existed for more than that. Did you realise that most public schools such as Eton are charities? http://www.thirdsector.co.uk/news/Artic ... ce-courts/

The reason that the merger is being proposed is that the Charity Law changed so that all the activities of the CTC fall within the definition of charitable purposes under the 2006 Charities Act.

You can see the things that qualify as Charitable Purposes at http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/Public_benefit/charitable_purposes.aspx. Probably the most important from the CTC's point of view is "the advancement of amateur sport".

This is defined as:

1. The advancement of amateur sport means the advancement of any sports or games which promote health by involving physical or mental skill or exertion and which are undertaken on an amateur basis. Our published guidance on Charitable Status and Sport is currently being revised to reflect the definition of sport in the Charities Act.

2. Examples of the sorts of charities and charitable purposes falling within this description include:

* charities advancing sport at a local club e.g. local football, rugby, tennis clubs etc;
* multisports centres;
* other organisations concerned with the promotion of a particular amateur sport or game.



jabbs wrote: I myself Have the good fortune to be a fit, active, cyclist, certainly not a deserving cause for charitably minded people. If they are going to donate money I would sooner see it go to the RNLI or Cancer Research

I'm glad to learn that you are faring so well.

The idea behind charitable status is to make the most of our resources and in particular save on tax where possible. It will also make administration easier with the elimination of quite a few areas of duplication, particularly re. accounts. The CTC will be able to make your subs stretch further and remember, while we certainly try and assist our members in being "active cyclists" we also help improve people's lives by giving them an interest and a form of activity which improves their health.

If we consider how many people may die due to the effect of obesity and a sedentary life style, I think I could make a case for saying that the CTC may be able to save more lives than the RNLI by encouraging people to be active cyclists such as yourself.

thirdcrank
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Re: Query

Postby thirdcrank » 3 Dec 2010, 11:13pm

jabbs wrote:.... Does the CTC mean to put itself into the same bracket as Age Concern ...


I certainly hope we don't go the same way as Age Concern. Age Concern was trundling along very nicely as the respectable sort of charity you have in mind, when somebody had the bright idea that as a 'top brand' in championing the elderly they could also sell various services to them. They could not do this as a charity so they created a sister organisation to operate the trading arm - this was known as Heyday. In the end the people rattling the tins and running the Age Concern charity shops couldn't raise the pennies as fast as Heyday was losing the £££. Eventually, it seems that £22+ million :shock: went down the plughole. Help the Aged and Age Concern "merged" to form Age UK, but I think in reality the former rescued the latter. Sir Christopher Kelly (the standards in public life expert) was commissioned to investigate this and write a report. It's called 'Heyday review' and it makes depressing reading. At one stage it was available as a .pdf on the AgeUK website but I couldn't find it when I just looked.

http://en.wikipedia.org/wiki/Age_Concern

jabbs
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Re: Query

Postby jabbs » 4 Dec 2010, 5:43pm

Thanks for the advice.
So what's the objections to the merger? It seems that the 2009 Charities Act has expanded the concept of Charity to include any organisation which provides a beneficial amenity to the community. This could include all Cycle Clubs, I think I'll vote in favour.

thirdcrank
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Re: Query

Postby thirdcrank » 4 Dec 2010, 6:22pm

jabbs wrote:... I think I'll vote in favour.
And please don't get the impression I'd try to stop you.

thirdcrank
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Re: Query

Postby thirdcrank » 5 Dec 2010, 10:04am

John Catt wrote:... Did you realise that most public schools such as Eton are charities? ...
I certainly knew but it seems rather an odd example for anybody wanting to bang the drum for the charity movement. Charities were the original good causes - relief of poverty and so on and historically, the beneficial tax régime has been intended to promote them. In reality, the very wealthiest in our society have exploited the law to to their own advantage and it's only quite recently that largely unsuccessful attempts have been made to redress this eg by trying to compel public schools to offer the occasional free place to children who are truly poor.

AFAIK, there are two main tax benefits associated with a charity. The first is that its financial procedures attract certain concessions. The second is that donations are tax deductable for the donor - a huge concession to anybody with a lot of £££ - either income or capital liable to tax. Charitable donation was AFAIK one of the big tax avoidance tactics in the period after the war when Super Tax was charged at 19/6d in the pound (97 1/2p)

The point about Gift Aid - which is now apparently the big reason for becoming a charity - is that this fairly new arrangement allows the charity - not the donor - to reclaim any income tax. Give £1 to charity, tick the Gift Aid box, and they can reclaim something like 27p making that quid worth £1-27 (or whatever.) Part of the underlying reasoning is that those odd 27 pences are insignificant to the donor and not worth the faff of claiming back off the taxman, but when they are aggregated they add up to a tidy sum for the charity, which is well-worth the faff.

Perhaps you could confirm whether I am right in thinking that if a hard-headed member of an eventual CTC Charity wanted to keep their personal costs down, they could leave the Gift Aid box unticked, and then claim the tax back for themselves? For a higher rate tax payer that's even better value. (It was the mention of public schools that got me into this tax avoidance frame of mind.)

(Sorry, but I was so mad about the £22+m going down the pan at Age Concern, I forgot to reply to this :oops: )

thirdcrank
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Re: Query

Postby thirdcrank » 7 Dec 2010, 8:57pm

Unless somebody contradicts me, I think the tax position for whatever a CTC member is to be called under a unified charity would be:-

An income taxpayer could either

A Tick the Gift Aid box and the CTC Trust would benefit by being able to reclaim. This means that the Inland Revenue would increase the subscription by the Gift Aid amount.
OR
B Ignore the Gift Aid box and claim their subscription as a decuction from income tax. This means that the Inland Revenue would give a refund on the subscription at the taxpayer's highest rate.

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Graham
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Re: Query

Postby Graham » 7 Dec 2010, 9:33pm

thirdcrank wrote:B Ignore the Gift Aid box and claim their subscription as a decuction from income tax. This means that the Inland Revenue would give a refund on the subscription at the taxpayer's highest rate.

Are donations to charity tax deductable ?? Sorry, I have forgotten.

thirdcrank
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Re: Query

Postby thirdcrank » 7 Dec 2010, 10:34pm

Graham wrote:
thirdcrank wrote:B Ignore the Gift Aid box and claim their subscription as a decuction from income tax. This means that the Inland Revenue would give a refund on the subscription at the taxpayer's highest rate.

Are donations to charity tax deductable ?? Sorry, I have forgotten.


That's my understanding. What I'm trying to get across is that if somebody wants to donate to what we might call a traditional sort of charity, then Gift Aid is a way of increasing the amount of the donation. I should have thought that most people joining a membership organisation would like to do it as cheaply as possible - they do say charity begins at home. (As I mentioned further, it was the mention of Eton College that put me in this frame of mind.)

I'm no tax expert so I'm open to contradiction.

swansonj
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Re: Query

Postby swansonj » 8 Dec 2010, 7:00am

Graham wrote:
thirdcrank wrote:B Ignore the Gift Aid box and claim their subscription as a decuction from income tax. This means that the Inland Revenue would give a refund on the subscription at the taxpayer's highest rate.

Are donations to charity tax deductable ?? Sorry, I have forgotten.


Could someone who is an expert in tax please confirm if this is true or not? I have never heard before of the option of the individual making a donation reclaiming the basic rate tax. I thought the system was that the charity (and only the charity) could reclaim the basic rate taz and the individual could reclaim any higher rate tax. I thought subsricptions were only tax deductible if to a professional organisation necessary for your trade.

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hubgearfreak
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Re: Query

Postby hubgearfreak » 8 Dec 2010, 8:24am

thirdcrank wrote:it was the mention of Eton College that put me in this frame of mind.)


i see what you're thinking, but it's not so.

in the days of supertax, the banker or industrialist had the option of either giving the government 90p of everything he earned after a cut-off point, or giving a £1 to who he wanted to.
so if he believed in a long dead and not even certain that he existed mythical persom (let's call him josias) he could give his money to other followers of josias who could then promote their homophobic and anti-contraception agendas at both home and abroad.
And so because he (the industrialist) had managed to exploit so many people/ the natural environment he could also bypass the democratic process of where taxes are spent. giving 27p in gift aid is an undemocratic nonsense really, as it means that those who can afford to give to say, breast cancer, means that breast cancer research is subsidised by the taxpayer, at the expense of looking after and treating alcoholics

thirdcrank
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Re: Query

Postby thirdcrank » 8 Dec 2010, 9:00am

I can only say that I used to be a member of a benevolent fund which was, to all intents and purposes, a small-scale private health insurance scheme but established to enable it to be treated as a charity. The membership was never more than about 1300 and it will now have gone out of existence through an inevitable lack of members - all the eligible people having retired etc.

Barry Flood
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Re: Query

Postby Barry Flood » 8 Dec 2010, 11:10am

swansonj wrote:Could someone who is an expert in tax please confirm if this is true or not? I have never heard before of the option of the individual making a donation reclaiming the basic rate tax. I thought the system was that the charity (and only the charity) could reclaim the basic rate taz and the individual could reclaim any higher rate tax. I thought subsricptions were only tax deductible if to a professional organisation necessary for your trade.


I hate to admit this in public but I was an Inspector of Taxes. In answer to several points I see discussed in the forum, this is how Gift Aid works
First you must pay UK tax.

Second is the gain to the CTC.
Gift Aid donations, i.e. subscriptions if we become a unified charity, are regarded as having basic rate tax deducted by the member. The CTC would take your donation - which is money you've already paid tax on - and reclaim the basic rate tax from HM Revenue & Customs on its 'gross' equivalent - the amount before basic rate tax was deducted.
Basic rate tax is 20 per cent, so this means that if your full CTC subscription is, say £36, then using Gift Aid, it’s worth £45 to the CTC, so we get an additional £9 for every member paying a full sub of £36.

Third is the gain to a higher rate taxpayer personally, (and is separate and additional to the gain to the CTC described above).
If you pay higher rate tax, you can claim the difference between the higher rate of tax 40 and/or 50 per cent and the basic rate of tax 20 per cent on the total 'gross' value of your subscription to the CTC.
For example, if your subscription is £36, the total value of your subscription to the CTC is £45 - so you personally can claim back:
• £9 - if you pay tax at 40 per cent (£45 × 20%)
• £13.50 - if you pay tax at 50 per cent (£45 × 20%) plus (£45 × 10%)
You can make this claim on your Self Assessment tax return.

Hope this helps.
Regards
Barry Flood
CTC Councillor

velotour
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Re: Query

Postby velotour » 17 Dec 2010, 2:10pm

Does the reply by Barry Flood mean that were the CTC to become a charity they would have to contact all the members to ensure that they paid UK tax (ie they were not below the tax threshold?)

Secondly - when I go into stately homes and suchlike which are charities (Chatsworth House comes to mind) I can either just pay an entrance fee or elect to sign gift aid forms which gives the charity the extra money. So if I am a UK tax payer will the CTC have to get me to sign a gift aid form before they are entitled to claim tax on my subscription?

I have sympathy with previous comments being uneasy that taxpayers money is being handed out to what is a recreational membership club. Given such uneasiness can I decline to sign up to gift aid thereby denying the club the right to claim tax on my behalf?

Any comments to elighten me will be gratefully received

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Simon L6
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Re: Query

Postby Simon L6 » 17 Dec 2010, 3:41pm

velotour wrote:Does the reply by Barry Flood mean that were the CTC to become a charity they would have to contact all the members to ensure that they paid UK tax (ie they were not below the tax threshold?)

that's the implication within the CASS report. I imagine that the question would be asked at renewal time.