The government should increase charity tax breaks in line with inflation, a group of more than 20 sector bodies have told the Chancellor of the Exchequer. 

The Civil Society Group, a coalition of nearly 90 charity bodies, has sent a letter signed by 22 of its members to the Chancellor, Rachel Reeves, about measures that could be implemented in the near term that are “low-cost and impactful”.

The letter, which has been sent in advance of the Budget on 30 October, says charity tax limits have “remained static” in recent years.

“This did not have much of an impact on charities’ finances while inflation remained below (or close to) the Bank of England’s 2 per cent target,” the letter says.

“However, since the high levels of inflation that occurred in the aftermath of the pandemic, the value of these limits has eroded significantly.”

It gives the example of the Gift Aid Small Donation Scheme, which allows charities to claim relief on up to £8,000 of small donations each year without having to submit paperwork for each individual gift.

The group says the cap on the scheme has remained unchanged for more than seven years. 

“If this limit had kept pace with inflation when many of the rules for GASDS were changed in April 2017, it would now stand at £10,358,” the letter says.

Other limits that have not increased with inflation include the maximum total donor benefit value for Gift Aid, which is currently £2,500, it says. 

The limits for maximum permitted small trading turnover, which stands at £8,000 with gross income less than £32,000 and £80,000 for charities with income more than £320,000, have also remained static as well as the £30 limit for individual GASDS donations.

The letter also calls for the Chancellor to adequately fund the Charity Commission while urging the devolved authorities to extend similar support to the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.

The coalition group is also urging the government to push ahead with a consultation on the introduction of VAT relief on charitable donations and donated goods.

Alongside these requests, the group has outlined a longer-term vision for putting the sector on more sustainable footing while “contributing to the delivery of the government”.

This includes calls for a requirement for public bodies at all levels to ensure grants and contracts meet the “true costs” of delivering public services and the appointment of a government philanthropy champion to drive up charitable giving.

Richard Sagar, head of policy at CFG, said the Civil Society Group’s short-term asks could be implemented for little cost yet could have a major impact.

“This Budget submission is civil society’s opportunity to contribute to the new government’s thinking while emphasising the value that civil society brings to society and the economy,” Sagar said.

“The Chancellor has been clear that the government wants to maintain its fiscal rules and the Civil Society Group’s submission reflects her aim.

“Our short-term asks could be implemented for little cost yet could have a major impact on civil society’s ability to provide support for the most vulnerable in society.”

Sagar said the sector continues to absorb an “increasing amount of pressure” from rising inflation and costs through to decreasing donations and increased demand for services.

“By supporting charities, the government can maximise the impact the sector can have on the government’s mission areas, from health and social care to housing,” he said.