The Gift Aid scheme enhances donations to charity by 25 per cent and can reduce the cost of a gift to charity for higher or additional rate taxpayers to just 50 per cent of the gross donation in some cases.
Gavin McEwan explains:"That may encourage wealthier donors to give more. New rules on inheritance tax make donations to charity even more attractive, particularly if the legacies to charity are 10 per cent or more of the testator's estate.
"The new rules reduce the inheritance tax rate from 40 per cent to 36 per cent on parts of an estate left to otherwise-chargeable beneficiaries – family and friends – though not spouses or civil partners who already benefit from exemptions.
"But some incentives designed to promote giving will have a more limited effect. The Small Gift Aid Donations Scheme at bill stage at Westminster will allow some charities to claim additional tax relief on small donations, though a track record must be demonstrated in reclaiming Gift Aid.
"The maximum benefit under the rules as currently drafted is only £1,500 per year, so this level of tax relief will be a drop in the ocean for larger charities."