Fall in tax rate will hurt charities
Charities expect to lose more than £90 m a year when the lower rate of income tax is introduced
Charities are bracing themselves against a yearly loss of more than £90m when
the income tax rate falls from 22% to 20% next month.
Although the change is good news for consumers, it will reduce the amount of
Gift
Aid charities can reclaim on donations, according to
The
Press Association.
Gift Aid enables charities to reclaim the tax paid on one-off donations,
which means when Gift Aid is included, every pound donated to charity is
actually worth £1.28 to the organisation in question.
But from April 5 the value of donations will drop to £1.25 for every pound
donated, which will reduce charities’ income by more than £90 million a year –
the equivalent of vaccinating 18 million children against childhood diseases.