Charities across the UK are set to lose out on £100m as Gift Aid transitional relief comes to an end on 5 April 2011. Individuals are being urged to make donations now to avoid charities missing out. Gift Aid is one of the easiest ways to make a donation tax effective. The charity reclaims the basic rate tax from the Inland Revenue. There is no extra cost to the donor.
According to Helen Besant-Roberts, a partner at accountancy firm, Hurst, who advises charities across the UK, a personal donation of £5,000 made now will lose out on £160 if it is made after Tuesday 5 April. This means charities should actively be contacting donors requesting they bring forward any pending donations.
Besant-Roberts said:
“This is a vital tax break for charities. All charities will be affected especially at a time when charities are being hit from all angles with rising costs, government spending cuts, the VAT rise, and people giving less in a difficult economic climate. In particular many smaller, local charities are going to suffer. Many have been forced to reduce resources and are less likely to have sophisticated systems in place.“
In 2008, the basic rate of income tax was reduced from 22% to 20%, resulting in charities receiving a reduction in the amount of Gift Aid that could be claimed back. To soften the blow, the Government introduced a delay in its effects and Gift Aid transitional relief was introduced for three years, which is now coming to an end.