From 6th April 2011, the transitional relief that HMRC added to the Gift Aid amount will no longer exist   As a result the gift aid that your organisation can reclaim on a donation is dropping to 25p in every £1 raised.

Transitional relief was introduced in 2008 to compensate charities when the basic rate of income tax was reduced from 22 pc to 20 pc.  The lower tax rate meant charities could only reclaim 25p from every pound instead of 28p.  The transitional relief was used to boost the relief back to 28p.

A 3 per cent reduction may not sound much, but it may have a significant impact on charities income.  For example, some of our larger customers could be out of pocket in excess of £100,000.  Even a smaller charity could be losing £15,000 based upon £500,000 of gift aided money.

The effect across all charities could well exceed £100m in lost revenue.

All donations received bore the 5th April 2011 will be calculated on that year's gift aid calculations so the change is not retrospective.

If you are using our software, then you do not need to do anything to make the switch over.  When you claim Gift Aid on donations from 6th April 2011 then transitional relief will not be included.