Re: Important Principle of the UK system
Re: Important Principle of the UK system -- NikW Top of thread Forum
Posted by:
Joe ®

03/01/2005, 14:55:43
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There is a degree of  commonality between the US and UK treatment of Charities - the main difference being that HM Gov. has first claim on the money - and there is no additional offset against an individuals tax relief.

That's my understanding as well. It's basically the same system, just in reverse.  The government could disallow the additional payment in the UK, and the US government could disallow the deduction and in both cases, it would keep more of the tax money.

Although in the UK there is no additional offset for taxpayer relief, it means that the taxpayer can effectively donate more money, part of it coming through the government.  I actually think the US system probably works better, because people are more apt to donate if they know it will reduce their taxes.  So charities often advertise that donations are tax deductible and that probably encourages donations.  That doesn't seem to be the case in the UK.

I assume you could get a pretty good idea of what amount EV is getting from the government, by taking an average tax rate and comparing that to the total.  Isn't that right?  So, if total "donations" are 500,000 and the average tax rate is 15%, the amount coming from the government would be about 65,000 and the direct donation amount would be 435,000.

In the US, if you assume the same tax rate, taxpayers could donate 500,000 to EV, and then the government would essentially forego $75,000 in taxes if the taxpayers deducted their donations at a 15% tax rate..







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