Fundraising news, ideas and inspiration for professional charity fundraisers

Budget offers 22% transitional rate for Gift Aid over three years

Budget offers 22% transitional rate for Gift Aid over three years
Big Ben

The Government has offered charities a three-year transitional rate of Gift Aid worth around £300 million to alleviate the reduction in the value of Gift Aid on donations following the drop in income tax next month.

The announcement was made by the Chancellor Alistair Darling MP earlier this afternoon in his Budget speech to the House of Commons. With effect from 6 April 2008, “charities will be able to claim Gift Aid at a transitional rate, consistent with a basic rate of income tax of 22 per cent, for three years”, according to the Budget document. This covers the tax years 2008-09, 2009-10, and 2010-11.

Other changes related to Gift Aid include “a programme for bringing additional smaller charities into Gift Aid”, the redesign of HMRC’s ./guidance, and measures designed to increase the awareness of Gift Aid “including the launch of targeted marketing tools” to 5,000 new charities.

The transitional rate was part of the Chancellor’s speech entitled ‘Modernising the tax system’.

The package of measures followed HMRC’s consultation with the charity sector over Gift Aid, launched in June 2007, and how it could be made more effective. Over 500 views were submitted to the consultation.

The Government today published its response to the Gift Aid consultation in which it detailed some of these changes. However, it did not propose making further changes to the system to make it easier for some donors to give, for example. HMRC argued in the document that “these are complex issues that require a better understanding of donor behaviour and a full assessment of the risks that could arise if alterations were to be made to a currently successful system”.

It added that “the Government will continue to work with donors and charities to develop understanding of donor behaviour and use that to inform further thinking about Gift Aid”.

The Budget also included a reference to payroll giving, namely that the Goverment would “continue to work with the sector on other ways to support charitable giving, including through payroll giving”.


Howard Lake is a digital fundraising entrepreneur. Publisher of UK Fundraising, the world's first web resource for professional fundraisers, since 1994. Trainer and consultant in digital fundraising. Founder of Fundraising Camp and co-founder of Research massive growth in giving.

Get free email updates

Keep up to date with fundraising news, ideas and inspiration with a weekly or daily email. [Privacy]

* We do not share your email or personal details.
" />