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05/03/2008
Charities To Lose 'Millions' Over Tax Changes
Charities have been warned that they stand to lose out on around £90 million when the new lower income tax rate is introduced next month.
The Charities Aid Foundation (CAF) said that the drop in the basic rate of income tax will reduce the amount of gift aid that charities can claim on donations.
The amount lost, the CAF says, would be enough to vaccinate 18 million children from childhood diseases, pay for 3,025 elderly people to live in a care home for one year or buy 1.3 million hearing aids.
Gift Aid, which was introduced in 1990, allows charities to reclaim the income tax paid on one-off donations. Currently, every pound given to a charity using Gift Aid is worth £1.28 for them. After April 5, when the basic rate will fall from 22% to 20%, this will drop to £1.25.
The CAF is urging people who plan to give lump sums to charity to make their donation before April 5, so that charities can claim back the tax.
John Low, Chief Executive of the Charities Aid Foundation, 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."
(KMcA/JM)
The Charities Aid Foundation (CAF) said that the drop in the basic rate of income tax will reduce the amount of gift aid that charities can claim on donations.
The amount lost, the CAF says, would be enough to vaccinate 18 million children from childhood diseases, pay for 3,025 elderly people to live in a care home for one year or buy 1.3 million hearing aids.
Gift Aid, which was introduced in 1990, allows charities to reclaim the income tax paid on one-off donations. Currently, every pound given to a charity using Gift Aid is worth £1.28 for them. After April 5, when the basic rate will fall from 22% to 20%, this will drop to £1.25.
The CAF is urging people who plan to give lump sums to charity to make their donation before April 5, so that charities can claim back the tax.
John Low, Chief Executive of the Charities Aid Foundation, 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."
(KMcA/JM)
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