Subject to Royal Assent, tax year 2008/09 sees a reduction in the main rate of income tax from 22% to 20%.

To provide UK Charities (and Community Amateur Sports Clubs (CASCs) with certainty, Clause 50 and Schedule 19 of the Finance Bill 2008 proposes a transitional rule whereby Charities and CASCs will be able to continue to claim gift aid relief at up to 22% for qualifying donations made between 6 April 2008 and 5 April 2011.

While this is good news for charities, some specific points should be noted:

1. A claim must be made for charities to receive this transitional relief by using form R68.

2. This claim must be filed within 2 years of the end of the tax year for which the claim relates (or 2 years from the end of the accounting period to which the claim relates if a charitable company).

3. The transitional relief is in fact 2% added to the basic rate of income tax. This means that if the main rate of income tax were to fall again, the transitional rate that charities receive would fall from 22% to whatever the new rate is plus 2%.

Sharon Cooke 
June 2008