Giving to charities through Gift Aid is set to become easier and charities will get more, according to the Chancellor.

Under a new scheme charities will get more back from 2013 as they can claim Gift Aid on small donations under £10, even if the giver has failed to opt into the Gift Aid scheme.

This includes charities being able to claim Gift Aid on small donations made into charity tins and buckets, without the need for Gift Aid declarations.

Under Gift Aid, the Government pays charities the tax relief on your contributions. A basic rate taxpayer who makes a £100 donation will see their charity get a further £25, because for every £125 they earn they are paid £100 after tax.

Therefore, the difference (£25) is the tax relief on the donated sum.

Anyone giving to charity has to tick the relevant Gift Aid box to ensure their chosen charity gets the extra donation.

The exemption scheme will operate on all donations under £10 as long as they add up to less than £5,000 a year per charity.

The Government will also reduce bureaucracy for charities through the introduction of a new system of online filing.

The wealthy are also being encouraged to give with the rate of inheritance tax being reduced from April 2012 by 10%, for those estates leaving 10% or more to charity.

The Budget also outlined plans for a consultation to begin this year on proposals to encourage donations of pre-eminent works of art or historical objects to the nation in return for a tax reduction.

Methods to increase the take up of payroll giving, which allows individuals to give through their pay and reduce their income tax bill, will also be looked into by the Government.

Further reading/Key links

Top-up donations: Charity Giving
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