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The forthcoming drop in the basic rate of income tax has raised serious concerns with charitable organisations, who have claimed they will lose millions in Gift Aid Donations.
However, the axing of the lower rate is also a matter of major importance, said the Low Incomes Tax Reform Group (LITRG).
The Charities Aid Foundation estimated that, based on current levels of giving, UK based charities stand to lose out on about £90 million of Gift Aid each year once the basic rate is reduced to 20%.
This amount, said the foundation, is enough to vaccinate 18 million children from childhood diseases, pay for 3,205 elderly people to live in a care home for one year, or buy 1.3 million hearing aids.
Chief executive John Low urged taxpayers planning to give lump sums to charity to make their donation before the end of the latest tax year.
But the consequences of the abolition of the 10% tax band should not be overlooked, warned the LITRG (which for many years has campaigned for Gift Aid to be extended to non-tax payers and those whose marginal rate is 10%).
Technical director Robin Williamson said the move was 'very serious — particularly for women pensioners under 65, people who don't or can't claim Working Tax Credit for whatever reason, and those who have retired early because of, say, ill health'.
He added: 'It's a great shame that the Government has worked so hard for people on low incomes and is now preparing to take away the 10% band, which will badly affect a substantial number of people'.
Mr Williamson then remarked that the Treasury's attempt at simplifying the UK tax system was of less interest to LITRG than the poor's welfare.
'We're more concerned that people on low incomes have a reasonable life,' he said. 'Those who need to budget tightly, and have got used to the lower rate band, are about to be greatly upset by the Budget'.
