Charities ‘To Lose Tax Millions’

Charities are being warned they could lose more than £90m a year when the new lower income tax rate is introduced next month.

The Charities Aid Foundation (CAF) says the fall in the basic rate will reduce the amount of gift aid charities can claim on donations.

Gift aid enables charities to reclaim the tax paid on one-off donations.

CAF is urging people who plan to give a lump sum to charity to do so before the start of the new tax year.

At the moment, once gift aid is included, every pound donated to charity is actually worth £1.28 to the organisation in question.

From 5 April, the basic rate will fall from 22% to 20%, and that will mean a drop to £1.25 for every pound donated.

CAF estimates that the move will reduce charities’ income by more than £90m a year – the equivalent cost of vaccinating 18 million children against childhood diseases.

John Low, CAF chief executive, said: “It is good news for individuals that income tax is dropping but there will be millions and millions less for charities to claim back.

“Every pound counts, particularly as we fear that this will be a hard year for charities anyway due to the economy slowing.

“If you are a UK taxpayer and are planning to make a one-off donation it would be best for your charity if you give before April 5.”