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

- Link: https://fundraising.co.uk/2008/03/12/budget-offers-22-transitional-rate-gift-aid-over-three-years/
- Published: 2008-03-12T14:33:00+00:00
- Author: Howard Lake

**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](http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/GivingMoneyToCharity/DG_10015097)“
including the launch of targeted marketing tools” to 5,000 new charities.

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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](http://www.hm-treasury.gov.uk/budget/budget_08/documents/bud_bud08_giftaid.cfm)
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](http://www.hm-treasury.gov.uk/budget/budget_08/bud_bud08_index.cfm)
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”.