Radical changes to Gift Aid

Spring 2011 Newsletter

New legislation, announced by Chancellor George Osborne in the March Budget, will see Gift Aid available on the first £5,000 of small donations per year without the need for signed declarations. To be eligible, charities will need to have been registered with HMRC for Gift Aid for at least three years.

This will have a far reaching impact for charities who gain vital funds through collecting tins and street collections; it is estimated 100,000 charities will benefit to the tune of £240m. This is one of a number of new initiatives announced by the Chancellor which he believes will be 'the most radical reforms to charitable giving for more than 20 years'.

Further reforms include reducing the inheritance tax rate from April 2012 for those who leave more than 10% of their estate to charity and the promise of an online system for filing of gift aid claims by 2013. This builds upon the recommendations highlighted in the ‘Giving’ Green Paper, published December 2010, to reduce bureaucracy for UK charities.

However, this good news is dampened slightly by the realisation that Gift Aid transitional relief (whereby the Government refunded an extra 3p for every £1 donated to adjust to the reduction in basic rate tax from 22% to 20%) came to an end on 5th April 2011.

The full 'Giving' Green Paper can be accessed online.

Further information on Gift Aid and tax effective giving can be found on the Tax-Effective Giving website.