While drinkers and drivers may have lost out to the tax hikes announced in Alistair Darling’s first Budget as Chancellor, charities making use of Gift Aid were presented with some welcome news.

In light of lobbying by the Charity Tax Group, among others, Darling revealed that the rate of Gift Aid would remain at 22% until 2011, despite the basic rate of tax being reduced to 20% this April. The announcement has been met with widespread approval from the sector.

The Charity Tax Group’s director, Helen Donoghue, said: “We are delighted that the Chancellor has recognised the importance of supporting large and small charities in this positive way. This transitional relief gives the government sufficient time to look at the Gift Aid system as a whole and the positive proposals put forward by the sector to simplify and modernise this important relief and improve take-up of it.”

The Institute of Fundraising’s chief executive Lindsay Boswell also expressed delight that many of the issues raised by the sector during the HM Treasury review of Gift Aid had been recognised. “Ensuring that Gift Aid and other forms of tax-effective giving reach their full potential requires a partnership between the sector and government. Central to this is identifying and removing the key barriers to growth and the Institute would urge government to prioritise and move quickly with many of the proposals that have been outlined today,” he said.

The Charities Aid Foundation’s chief executive John Low described the decision as a “huge relief”, as CAF had feared charities would be losing in excess of £90 million per year when the basic rate of tax was reduced in April. “This will give charities a chance to adjust to the new lower rate,” he said. “We will continue to discuss with government how best to promote and simplify Gift Aid and other forms of tax effective giving.”

ActionAid’s director of fundraising, Richard Turner, said: "With over 80% of ActionAid's income coming from voluntary donations, this budget is good news for us. As a charity that invests in long-term projects, the extra £2.5 million that this will generate for ActionAid alone will do some real, lasting good around the world - and give our donors real value for the money they give us."

To read the Budget in its entirety, visit
www.hm-treasury.gov.uk/budget/budget_08/bud_bud08_index.cfm