The government has promised to maintain the amount of money available for good causes through Gift Aid until 2027, after the Chancellor announced plans to cut income tax.
Rishi Sunak used today’s Spring Statement to pledge that the basic rate of income tax will fall from 20 per cent to 19 per cent from April 2024.
This means the value of Gift Aid, which is linked to the basic rate of income tax and boosts the value of some charitable donations, would also fall.
Gift Aid was worth about £1.4bn to the charity sector last year, according to estimates published by the Charity Tax Commission and Pro Bono Economics.
To offset the lower tax rate, documents released alongside the statement say the costs associated with the tax cut include “a three-year transition period for Gift Aid relief to maintain the income tax basic rate relief at 20 per cent until April 2027”.
This will be implemented in a Finance Bill which will go before parliament closer to the change.
The last Labour government introduced a similar transition period in 2008, the last time the basic rate of income tax was cut .