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Chancellor George Osborne’s announcement of a cap of £50K on Gift Aid tax-relief may come into effect from 6 April 2013, meaning that now is the critical time to act, before the end of the financial year.

Perhaps one of the least understood areas of strategic giving is the tax benefit that both the charity and the donor can receive. A UK tax payer’s donation can be boosted by an additional 20%-25% of Gift Aid tax relief for the charity, plus the donor also receives generous tax relief in return. It is this donor tax relief that the Government is proposing to cap at £50,000, as announced by Chancellor George Osborne in this year’s budget.

Steve Harvey, Head of Trust & Estate Planning at Coutts, calculates that under current regulations (which will remain in force until April 5 2013) a donation of £100,000 made by a UK 50% rate tax-payer would yield £125,000 to the charity, whilst costing the donor only £62,500 (after deducting tax relief of £37,500)....

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