Government urged to clarify Gift Aid plans as end of transitional relief looms

Peers and sector groups express concern

The Government has been urged to announce as soon as possible how it intends to protect charities from the loss of income from Gift Aid once transitional relief ends in 2011.

During a Lords debate last week, Conservative peer Lord Elton said it was getting "uncomfortably close" for charities to plan for the change in less than two years' time.

"Will the minister bear to the Chancellor the great importance of him coming to an early conclusion as well as a favourable one?" he asked Lord Myners, financial services secretary to the Treasury.

Lord Myners said Government research into the effect of charitable tax relief on donors, which will inform thinking on Gift Aid, would be published in the autumn.

"No doubt the Chancellor will have more to say on this subject in either the pre-Budget report or the Budget next spring," said Lord Myners.

Transitional Gift Aid relief was introduced in last year's Budget in response to the cut in the basic rate of income tax.

Helen Donoghue, director of the Charity Tax Group, said she believed there was a "willingness to improve and simplify the Gift Aid system" at the Treasury. "Having said this, we are concerned that we are running up to 2011 very quickly and hope decisions will be taken very quickly," she said.

Hannah Terrey, head of policy and public affairs at the Charities Aid Foundation, said she was pleased that Gift Aid was being discussed at the highest levels of Government, but CAF opposed moving to an accounts-based system, which she said would "turn tax relief into a government spending commitment".

She added: "We believe that this could prove to be detrimental to the sector in the long run, especially when you consider the current strains on public finances."

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