Gordon Brown cuts £71 Million from Charity Gift Aid - Sutton Charity hit hard

3.42.00pm UTC (GMT +0000) Mon 16th Apr 2007

Paul Burstow, MP for Sutton and Cheam, has put a motion before parliament highlighting the unintended consequences of income tax changes announced as part of the last budget: a massive £71 million fall in charitable donations made as part of gift aid.

St Raphael's Hospice in Sutton predicts a 10% decline in its Gift aid income as a result of the decision.

The Charities Aid Foundation confirmed that the decision to reduce basic rate income tax from 22p to 20p in the pound will see income from Gift Aid fall from £625 to £554 million across the UK - a drop of 12%.

Mr Burstow decided to table his motion when St Raphael's Hospice in Sutton informed him they may lose up to 10% in the income it receives from Gift aid - a predicted decline from £88,000 to £78,600.

Mr Burstow has also put a number of questions to Chancellor Gordon Brown asking what plans he has made to counter the effects of the shortfall.

Speaking on this development, Paul Burstow MP said:

"As a supporter of St' Raphael's, I am concerned about the impact a fall in gift aid income will have. The tax cut may be welcome but Gordon Brown must ensure that it does not trigger a funding crisis in the charity sector."

"If we are to take the Government's pledge to support the voluntary sector seriously, it must act now to redress the drop in income for charities."

Keith Witham, Fundraising Director for St Raphael's Hospice in North Cheam said:

"Charities like St Raphael's Hospice have been encouraged by the Government to get as many of our donations as possible "gift aided" by the donors, so that we can claim the gift aid support from the government."

"The Chancellor's decision to abolish the 10p tax rate and reduce the basic rate from 22p to 20p will leave most taxpayers unaffected, but future gift aid claims will be based on the new, lower, basic rate and all charities will lose out."

Notes to Editors:

Gift aid is tax relief on money donated to UK charities, whereby donations are treated as if the donor had already deducted basic rate tax from their donation when deciding how much to give. As such charities can reclaim this tax to increase the value of the donation.