The Chancellor of the Exchequer today announced a raft of changes which are designed to boost charitable giving. Hailed as the"most radical reforms to charitable giving for 20 years", the changes are estimated to benefit up to 100,000 charities to the extent of £240 million.

Amendments to the Gift Aid benefits rules will mean that charities can provide more generous tokens of thanks to donors without jeopardising the tax efficient status of donations. This will help to bring more donations within the Gift Aid scheme and may encourage more donors to consider the use of Gift Aid when making donations. The introduction of a new scheme from April 2013 allowing charities to claim Gift Aid on up to £5,000 of small donations without the need for Gift Aid declarations will also allow charities to claim tax relief where it was not previously possible. Online tax reclaims by charities may also help to reduce the burden of form-filling and will be welcomed by many charities which already benefit from the Gift Aid scheme.

Encouraging donations of pre-eminent works of art or historical objects will be the focus of a Government consultation in 2011, potentially filling a gap in the current system of tax reliefs which focus on gifts of cash, shares and land. A planned reduction in the rate of Inheritance Tax from 40% to 36% where a tenth of a deceased's estate has been left to charity may also encourage testators to consider leaving more to charity in their wills, although that change will only affect deaths on or after 6th April 2012.

Commenting on the Budget announcement, Gavin McEwan, Partner and Deputy Head of Turcan Connell's Charities Legal Team said:"Many of today's changes will be welcomed by the charity sector as improvements in the Gift Aid scheme with a real potential to encourage further charitable giving. But this has to be balanced against the loss of Gift Aid Supplement which comes to an end on 5th April 2011 and which will reduce the benefit of Gift Aid from over 28p for every pound donated to 25p in the pound. For many charities, the effect of that change will outweigh the benefits of the Chancellor's Budget statement: and that means some charities will have to work hard to make the 'radical reforms' work to their benefit."

Gavin McEwan was invited to comment on the measures included in the Budget to increase charitable in CharitiesDirect.com. To read the full article from CharitiesDirect.com, please click here.