Withdrawal of Transitional Relief on Gift Aid

Transitional relief was introduced on 6 April 2008 to assist charities following the reduction in the basic rate of income tax from 22% to 20%. Without it a charity could only reclaim 25p for every £1 donation instead of 28p. The relief effectively topped up the 25p back to 28p. The idea was to give charities three years to adjust to the new 20% rate and to give them time to encourage their supporters to increase their Gift Aid donations to make up for the imminent tax relief shortfall. The transitional relief expires on 5 April 2011.

Until 5 April, for every £1 given under Gift Aid, a charity can recover 28p, so the total value of the donation is £1.28. As from 6 April 2011, for every £1 donation, a charity will recover just 25p, so the total value of the donation will only be £1.25.

Charities should urgently consider asking individual donors to bring forward any one-off or regular Gift Aid donations to the current tax year so as to benefit from transitional relief.

For further advice, please contact:

Andrew Goldstone