The cut of 2% in the basic rate of tax (from 22% to 20%) announced by Chancellor Gordon Brown in last weeks budget speech, could see the value of tax reclaimed on donations through Gift Aid fall by £71m, according to the Charities Aid Foundation (CAF). The change in the tax rate, due to take effect in April 2008, will mean that charities will only be able to reclaim 25p on every pound donated instead of the current 28p.
The government has pledged to help offset the potential loss of income by consulting with charities on measures to increase the take-up of Gift Aid. At the same time as the tax changes are implemented, the value of benefits that donors may receive in recognition of their gifts will rise from 2.5% to 5% of the donation for those donating £1,000 or more, with the upper limit increased from £250 to £500.
Published: 09-04-2007