Around 2,000 old folk in Shetland will lose their Christmas bonus if Shetland Charitable Trust agrees this week to tighten the rules and cut the cost of its flagship policy by more than half.
The radical rethink by a group of trustees would see the annual grant restricted to each person over the age of 60 who receives pension credit from the government. The bonus is also paid to disabled people and they would continue to qualify.
Until now the grant has been given to each of 3,300 households containing a pensioner or disabled person regardless of how well-off they are. But HM Revenue and Customs (HMRC) has begun levelling an annual tax demand of over £200,000 for what it regards as a non-charitable gift because it is not targeted at the needy.
Nine trustees on the Christmas grant review group have been looking at how to prevent community funds going straight into the taxman’s pocket and will table their solution at Thursday’s meeting of the trust. It would mean only around 1,300 people over 60 would still qualify, cutting the cost of the scheme from £1.3 million to £590,000 this year. They also propose cutting the grant from last year’s £324 to a fixed rate of £300.
The winners under the new scheme would be households where there is more than one pensioner on pension credit which would qualify for a £300 grant for each of them.
It has emerged that until recently the trust was facing a tax bill of nearly £830,000 to cover the past three years of the scheme. After 18 months of negotiations HMRC has agreed to accept £605,000 of which £127,000 has already been paid over.
During negotiations HMRC told trust financial controller Jeff Goddard it was not aware of any other charity in the country which simply hands out cash without means testing.
Trustees will be asked to agree to settle the remainder of the bill, which will require them to fork out nearly £478,000.
Mr Goddard believes the deal is the best that can be achieved from long negotiations and he will advise the trust not to bother challenging the demand through the courts.