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Charities Will Suffer From Rise in VAT

I have been following the comments and reactions to the new increased rate of Value Added Tax in recent weeks, and one reaction was particularly noticeable recently.  It came from a Labour MP who feels that charities will suffer as a result of the new higher rate.

The shadow Chief Secretary to the Treasury, Liam Byrne, stated that some smaller charities in particular will suffer noticeably as a consequence of the new rate of 20% that will come into force early in January 2011.

It has been calculated by Labour that 3.6% of the income gained by smaller charities will have to go towards paying VAT.  This is valuable income that would otherwise be directed towards helping the people for whom various charities are there to help in the first place.

While 3.6% may not sound like a lot, it does amount to a significant sum for some charities when you take into account their total income for the year.  I was shocked to read that one charity that helps blind people could lose an additional £100,000 every year.

Of course the rise in VAT will not be to the liking of everyone.  It has long been stated by the new coalition government that drastic steps should be taken to try and reduce the current national debt.  This is very important of course but there will be casualties and it would appear that the charities could be one of them.

If you have any concerns about the forthcoming rise in VAT and how it might affect your business, you may get in touch with us here at St Matthew for confidential and impartial advice now.


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