CHARITIES

Gift Aid

The reduction in the basic rate of income tax from 22% to 20% for 2008/09 onwards has the consequential effect of reducing the amount of tax a charity can claim back from HMRC in respect of Gift Aid donations received. For three years only, i.e. 2008/ 09, 2009/10 and 2010/11, a charity can claim back the difference. For a donation of £78, for example, a charity could previously claim back £22 (£78 x 22/78). It will now be able to claim back only £19.50 under normal rules (£78 x 20/80) but can claim back the extra £2.50 under these transitional rules. The claim must be made within set time limits.