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Charities given 'rate relief' by chancellor

British charities have welcomed the Budget, which includes a special provision to save them from a cut in tax income.

The previously announced cut to the 22p income tax rate to 20p would have lost the non-profit organisations £90 million a year in gift aid, the BBC reports.

However, chancellor of the exchequer Alistair Darling said this week that a 'transitional rate' would be introduced for charities for the next three years, in order to prevent this reduction in income.

Gift aid allows the organisations to claim tax back on donations - therefore, the two per cent cut in the tax rate would equate to a 3p cut for every pound given to charities.

John Low, chief executive at the Charities Aid Foundation, said: "It is a huge relief as we feared charities were going to lose in excess of £90m a year when the basic rate of tax comes down next month.

"This will give charities a chance to adjust to the new lower rate."

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