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Taxing time for animal charities

CHARITIES ARE facing severe financial hardship following the Government’s hike in National Insurance contributions, giving the lie to Chancellor Gordon Brown's assertions that he would usher in a new age of giving in Britain, writes Nick Mays

The extra tax burden comes on top of decreased contributions from individuals and a slumping stock market, which has already meant that charities have cut services. Guide Dogs for the Blind, for instance, has closed some of its training facilities.

The problems are also hitting many of the sectors dearest to Mr Brown's heart, including employment schemes and health care charities - forcing them to cut staff and delay developments.

In last week's Budget, Mr Brown provided none of the hoped-for measures that would have benefited the voluntary sector. With the 10% supplement to Gift Aid through payroll giving ending next April, and no indication that it might be extended, the voluntary sector is becoming increasingly worse off.

Simon Pellew is chief executive of Pecan, a Peckham-based employment charity that runs projects throughout south-east London. He says the extra tax burden will cost Pecan, which runs some of the Government's New Deal programmes as well as projects to help the mentally ill back into work, £30,000.

That is more than it costs for the charity to employ a member of staff. "It will make it harder for us to develop," he said. "Charities are particularly hard hit because we are people businesses with high staffing levels. This is a tax on employment."

Profits

Mr Pellew also pointed out that the Chancellor's strategy to help small businesses, relying as it does on tax credits, means that the voluntary sector misses out. "We don't pay tax on our profits, although we pay lots of other taxes," he said.

"We pay over £300,000 in tax to the national or local government. This is 7pc of our turnover. It is ironic given that we are seeking to serve the most disadvantaged in our communities, and we receive funding to do this from the Government."

Pecan’s experience is reflected throughout many other charities, including several of the animal welfare charities, many of which are facing a decline in donations and bequests in recent years.

Some, such as the RSPCA and IFAW have lost out on donations due to their increasingly political stance and the situation looks set to worsen with the increase in NI contributions.

Three years ago Mr Brown announced that he was heralding a "giving age" with the introduction of extended Gift Aid rules for charities. Since then, the environment in the sector has worsened.

Although Gift Aid and Payroll Giving, which allow charities to claim back the tax paid on their contributions, have increased the value of individual donations, they have not made up for the new burdens that have been placed on the sector and the fall in the stock market.