Dear Chief Secretary to the Treasury,
I'm afraid to tell you there's no money left.
Signed, Liam Byrne

(Outgoing Labour Chief Secretary to the Treasury. May 2010)

Wednesday, 18 August 2010

A form of tax relief?

It's in the Mail!
Tony Blair could claim tax relief of almost £1.75million as a result of his plan to donate the proceeds of his memoirs to a charity helping injured British soldiers.... and ... ... the multi-millionaire could lessen the blow to his wallet thanks to 'Gift Aid' rules brought in by his government ten years ago.
Maybe all those new rules were a good idea useful after all.
... under current tax rules, he faces a tax bill of £2.3million on the sum, as he pays income tax in the 50 per cent bracket.

This would mean the entire cost of the donation for Mr Blair would be the £4.6million advance plus the £2.3million paid to the taxman, adding up to £6.9million.
Wow! That's a lot of cash to give away. Seems remarkably generous.
But once he makes the donation, the former PM is perfectly entitled to claim back a large proportion of this original tax bill in the form of tax relief. Under Gift Aid rules, the Royal British Legion can first reclaim the basic rate portion of the tax already paid on the £4.6million by Mr Blair at 20 per cent. This amounts to an extra £1.15million and will swell the actual donation to £5.75million.

But under rules governing charitable donations, Mr Blair is also then entitled to receive tax relief equivalent to 30 per cent on the total donation of £5.75million. This would equate to a potential clawback of up to £1.72million.
So, if you give away a load of money you don't really need the uber-generous tax office will give you a third back - cash in hand - for being so benevolent. And, naturally ... Mr Blair's spokesman last night insisted that the former Premier would 'not benefit' in any way from the donation.

All this might, though, be idle speculation, because the Telegraph tells us that
It is not clear whether the offer to the charity includes the advance or whether the donation will simply be “proceeds” accumulated on top of the advance, which is usually repaid to the publisher.
So, if the book doesn't sell as many copies as anticipated the publishers might want some of their advance paid back - and, of course, they'll look churlish for taking cash destined to a well-deserving charity.

What a mare's nest - and quite clever too.

All this might mean that nobody really knows how much might end up being given to RBL - and the whole thing will prove to have been yet another empty gesture, nothing more than spin and free publicity for a book that's, pre-release - being offered at half price on Amazon. The Guardian tells us that this free advertising (some via the country's publicly funded state broadcaster, the BBC) seems to have worked too. Who'd a thought it!

The Metro refers to the possible donation as Blood Money, and Adnan Sarwar in the Guardian reminds us that when ...
... Sir John Chilcot [Iraq War Inquiry] asked Blair if he had any regrets. After initially dodging the question, Blair answered with a confident "No". In the audience were families who had lost their children in the wars. I was astounded by Blair's arrogance. Given the most public platform since he left office and a perfect opportunity to show some respect, he decided not to. ...

... I have heard people say if Blair was being genuine he could have donated anonymously and out of the public eye. I don't care if this is genuine or more spin – what I do care about is helping soldiers. ... I won't be buying Blair's book though.
And nor will Mrs Rigby be buying the book. If she wants to donate to the Royal British Legion she will do so directly, either via their website or by putting some money in one of their collecting boxes. She sees no need whatsoever to channel any donation through a third party.

Mrs R also wonders if, maybe, in the long run it's best to take the mickey as does The Daily Mash, and we should accept that
... the RBL should keep the money, it will do far more good with them than it will in Blairs pocket ...
We are all mortal, no matter how clever, how clean-living or how rich we are, it's the one certainty of being human - and there are no pockets in a shroud. A few months ago Mr Blair was looking quite frail which is why, thanks to ARRSE, Mrs R will share a verse from Bob Dylan's Masters of War
Let me ask you one question
Is your money that good
Will it buy you forgiveness
Do you think that it could
I think you will find
When your death takes its toll
All the money you made
Will never buy back your soul.


Mark Wadsworth said...

There making something very simple appear very complex.

The idea is that such a gift is completely tax neutral.

If TB hands over £5 m gross, the charity reclaims (about) £1.25 m. He includes the £5 m income on his return, and deducts the £5 m income from his taxable income, so overall the two net off to nothing.

As a side issue, if his income is big enough, he can sort of offset another £1 m against income tax liability on his other income.

Mrs Rigby said...

You're right MW - but 'simple' doesn't fill a newspaper column.