Bonus will be paid – for now
By JOHN ROBERTSON
THE CHRISTMAS bonus for pensioners and the disabled is to be paid out this year despite the threat of an extra £250,000 tax demand because the scheme is not focused on the poor and needy.
Shetland Charitable Trust decided in private session on Wednesday to push ahead with the £1.13 million bonus payout after receiving fresh legal advice from Simon Mackintosh of Edinburgh lawyers Turcan Connell who flew up specially to attend.
Any further delay while negotiations continue with Her Majesty’s Revenue & Customs (HMRC) would have meant the trust running out of time to get the £321 bonus cheques out in time for Christmas.
But trustees were told they might see the tax bill for the scheme shoot up from its current level of £60,000 a year because they refuse to subject applicants to means testing.
HMRC considers only about 20 per cent of the 3,300 households receiving the bonus to be genuinely charitable cases and may levy the extra tax for bonuses being gifted to people who it thinks don’t need them.
Following Wednesday’s meeting, trust chairman Bill Manson dismissed means testing as “bureaucratic and invasive” and said if there was a bigger tax bill for this year’s bonus the trust would just have to pay it.
The bonus has been in the taxman’s sights since 1987 and trustees were warned about the problem of so-called rich pensioners in April after the new Charities Act outlawed “non-charitable” payments. Turcan Connell told them: “Consider the millionaire pensioner. Although he or she may qualify for relief by reason of age, where is the need?”
Mr Manson said the trust still believed the bonus was a charitable scheme and the big challenge now was to sort out how it will operate in the future, an area currently being explored with HMRC and the new charities regulator, OSCR.
People who have received the bonus in the past will be contacted soon by the trust about this year’s payment and new applicants can get in touch now for an application form. The bonus has been paid since 1975. One of its original aims was to give older Shetlanders a small share in the riches which were about to be reaped by younger islanders who gained well-paid work in the oil boom.
But in its current incarnation at least it appears that after this year it will no longer be a perk of living in Shetland.
Council sources this week said the spectrum of possibilities included everything from means testing, which it is accepted will be deeply unpopular, to exploring the possibility of protecting trust funds from the taxman. This last could even raise the spectre of bringing some trust funds under direct council control, itself a potentially divisive issue.