Yahoo News Cross-party group of MPs tables law change to make donations to all referendums tax-free after Brexit row
MPs from the three main parties are backing a law change to make donations to referendum campaigns tax-free after outrage over HM Revenue and Customs sent demands to major Brexit donors.
An amendment to the Finance Bill would extend the current exemption from inheritance tax for gifts to political parties to gifts to referendum campaigns under the Political Parties, Elections and Referendums Act 2000.
The change would stop millions of pounds in tax bills being levied on private donors to campaigns at the 2016 European Union referendum, the 2014 Scottish independence referendum and the 2011 AV referendum.
HMRC’s decision to send out tax letters last month means that JK Rowling, who donated £1 million to Better Together during the Scottish independence referendum, could face a shock 20 per cent inheritance tax bill.
The same applies to lottery winners Chris and Colin Weir, who gave more than £3 million to Yes Scotland campaign in 2014
The change to the Bill which is currently going through the House of Commons is backed by more than a dozen MPs from the Tories, Labour and the Liberal Democrats including Jacob Rees-Mogg, Iain Duncan Smith, Alistair Carmichael and Virenda Sharma), as an illustration of cross-party concern.
Charlie Elphicke, the independent Dover MP who tabled the new clause, said: “The law makes it clear that donors to political parties won’t get a tax bill.
“The same needs to go for people backing referendum campaigns. It’s crazy that people like JK Rowling should be punished for supporting democracy and caring deeply about the future of Britain.
“MPs across Parliament agree that the current rules are wrong and need to change. We need to bring the law up-to-date.”
The clause would extend the exemption from inheritance tax for gifts to political parties to gifts to referendum campaigns on a cross-party basis.
Mr Elphicke added: “The new clause I am tabling will help achieve a level playing field for individuals and corporations when it comes to gifts to referendum campaigns.
“It will make sure that individuals won’t suffer Inheritance Tax for gifts to Referendum campaigns and that they will be treated the same as donations to political parties.”
The Daily Telegraph disclosed last month how demands running into millions of pounds have been sent this month to major referendum donors.
In the letters the tax authorities had seized upon a relatively obscure area of inheritance tax laws which forces people to pay the 20 per cent tax upfront on large "gifts".
Peter Cruddas, a City financier who is facing a tax bill of £180,000 on his £900,000 donation to the Vote Leave campaign, said last night: “Governments should be giving tax breaks to donors of campaigns not looking to tax them.
“The sooner they sort this out the better because in the long run it is the electorate that will suffer not the tax man.”
David Wall, secretary to the Midlands Industrial Council whose members gave millions to the out campaign before the referendum in 2016, said: “I am delighted to see cross party support in seeking the amendment to the Finance Bill regarding donations to referendums.
“It is a sad day for our democracy when people face being penalised for supporting causes they believe in, irrespective of which side they supported at the time.”
Matthew Elliott, former Chief Executive of Vote Leave, said: "It is great news that there is cross party support to change this anomaly in the tax system.
“It was never the intention of the 2000 Referendum Act for large donors to be caught in the net of the Inheritance Tax Act.
“There was clearly an accidental omission in the drafting of the legislation, so it is only right that the mistake should be rectified.
“I urge MPs from both sides of the House to support this important amendment to the Finance Bill."
