Leaders work to resolve their differences on Gift Aid losses

Sector representative groups are struggling to find a common position over the estimated £70m loss of charity Gift Aid revenue caused by the Chancellor's budget promise to cut the basic rate of income tax by 2p.

The main points at issue are whether to press for 'transitional relief' and whether to campaign for Gift Aid to be decoupled from the basic rate of tax and fixed at 28p in the pound.

A letter drafted by the Charity Tax Group (CTG) has been sent to Gordon Brown, requesting transitional relief. This would allow the level of Gift Aid to decrease gradually rather than dropping suddenly when the tax cut comes in April 2008.

But one of the signatories, the NCVO, has now dissociated itself from the letter. The other signatories are the CTG, the Charity Finance Directors' Group and chief executives body Acevo.

"Before the letter was submitted, we stated to the CTG that if it needed support on this issue, it should contact us," said Ann Blackmore, head of policy at the NCVO. "But no copy of the letter was seen by the NCVO before it was submitted and we did not formally agree to its content."

The Institute of Fundraising has also criticised the letter. "A call for transitional relief at this point concedes defeat," said Megan Pacey, director of policy and campaigns at the institute. "The institute is surprised the CTG is prepared to give up on the £80 million this is worth annually to its members."

Separately, the institute's suggestion that Gift Aid should be uncoupled from tax rates has come under attack from the NCVO and the CTG. Both organisations argue that if this were to happen Gift Aid would become a grant, subject to complex public expenditure rules, rather than a tax rebate.

Seven sector representative bodies are meeting on 13 June to try to establish a common position for the Treasury's impending consultation on improving Gift Aid. "We must build on parliamentary support for this," said Helen Donoghue, director of the CTG.

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