Basic rate tax down from 22 to 20 pence - loss of over £70 million for charities

Gordon Brown's 2007 budget will result in a reduction of approximately 11.4% in Gift Aid for all charities.

The change next April will mean that charities will only be able to reclaim 25 pence on every pound donated instead of the current level of 28 pence. The CFDG and Acevo are calling for urgent Gift Aid reform.

The Chancellor has announced a consultation with the sector on measures to increase take up of Gift Aid.

The budget also includes an £80m fund to provide grants to small organisations, and a tax change to enable more flexible community development finance.

The Chancellor has increased the value of benefits that donors may receive from charities as a thank-you, from 2.5 per cent to 5 per cent of the donation for those donating £1,000 or more, with the upper limit increased from £250 to £500.

£11m from the Invest to Save Budget fund will go to 24 new projects supporting innovative approaches to the delivery of local services by third sector organisations.