Budget 2011: Gift Aid changes and philanthropic tax breaks

Budget includes Gift Aid reform and proposed tax breaks for art donations
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Rebecca Atkinson
Chancellor George Osborne has outlined changes to Gift Aid and plans to encourage philanthropic giving in his 2011 budget.

The chancellor said the government wants to encourage charitable giving and philanthropy and to support the voluntary sector. Changes to Gift Aid include the following:

  • From April 2012, the rate of inheritance tax will be reduced to 36% for those estates leaving 10% or more to charity, with the reduction reflected in the bequests to charities and not in payments to other beneficiaries
  • From April 2013, the government will introduce a small donations scheme that will allow chairites to claim on up to £5,000 of small donations each year without the need for Gift Aid declarations
  • The government will introduce an online system for charities to claim Gift Aid and will shortly be publishing "intelligent" forms that contain automatic checks for charities to use to apply for and claim tax reliefs
  • From this April, the Gift Aid benefit limit (the value of items or services a charity may give to a donor in return for a donation) will increase from £500 to £2,500. New guidelines will be published outlining exactly what a benefit is

Adrian Babbidge, director of heritage consultancy Egeria, said the move to online filing for Gift Aid and simplifying claims up to £5,000 in small cash donations should help motivate smaller charities to participate in the scheme.

He added: "This is a budget that will bring future, not present, benefit. Its most helpful changes will have a delayed impact; the priority for most museum charities now is to manage shorter-term pressures brought about by reductions in public expenditure (especially at a local level) and pressures on consumer spending."

Elsewhere, Osborne said the government will consult on proposals to offer tax breaks to encourage donations of pre-eminent works of art or historical objects to the nation.

Stephen Deuchar, director of the Art Fund, said: “This is potentially good news for museums and galleries up and down the country. Similar schemes abroad have not only encouraged owners to donate art to the nation, but have helped foster ongoing relationships between donors and institutions.”

The consultation will be launched later this year. 

In a statement, Arts & Business said the budget's announcements could have "a significant impact on the level of cultural philanthropy in the UK".

Update 24.03.2010

The story was updated to include a comment from Adrian Babbidge, director of heritage consultancy Egeria

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