How the tax man can help you help others

If the plight of the Kosovar refugees has led you to consider making a donation then a new law is on your side

SMALL DONORS who want to help the Kosovar refugees can make sure the tax man does his bit too, thanks to changes this week in the Millennium Gift Aid rules.

Millennium Gift Aid (MGA) allows qualifying charities to claim back the income tax you have paid on donations as small as pounds 5 a month. For every pounds 100 you give, the tax man adds nearly pounds 30. In order to get the relief, you must give at least pounds 100 by 31 December next year, either in a lump sum or instalments.

Until this week's change, only projects in 80 of the world's poorest countries, such as Bangladesh, Chad, Ethiopia and Vietnam qualified for MGA. Now the Treasury has said that projects supporting Kosovar refugees anywhere in the world will get it too. Charles Keseru, a spokesman for the Treasury, said: "Now even if they have moved to Germany or the UK - or anywhere else - Kosovar refugees will be able to benefit."

This week also saw the launch of the Disasters Emergency Committee (DEC), an umbrella body for 12 UK charities working to relieve the Balkan crisis. DEC is intended to last for only a few weeks, but any donations of pounds 100 or more will qualify for MGA.

Charles Grieve, DEC appeals executive, says: "It is brilliant that the pounds 250 limit from the original Gift Aid has come down to pounds 100. We are getting the money in quickly, we are getting it out to our member agencies quickly and they are spending it quickly."

Two of the charities behind the DEC are Oxfam and Save The Children.Yagnesh Patel, direct marketing manager at Save The Children says: "If somebody decides to make a donation to Kosovo, and we can claim Millennium Gift Aid, then that's great. All that additional tax income is money that we wouldn't otherwise have got."

Oxfam alone will raise extra funds of about pounds 1m - roughly 0.5 per cent of its total income - over the two years MGA is set to run.

Because MGA gets back tax that has already been paid, non-taxpayers' donations do not qualify. The pounds 100 qualifying minimum must all come from one person's donations, ruling out collections or fund-raising events.

You can boost your charitable donations via MGA by any payment method except an anonymous cash donation. The charity to which you give must have your name and address so it can send you an Inland Revenue form to sign and return to confirm the donation is genuine.

The inclusion of Kosovar refugees in MGA will have to be approved by MPs as part of the Finance Bill's passage through Parliament, but Mr Keseru anticipates no problems with this. The new rules will be worded so that any Kosovo donations made from 6 April 1999 onwards get MGA.

All 12 charities under the DEC umbrella qualify for MGA on relevant projects in their own right, which will now include any work with Kosovar refugees. Simon Collings, Oxfam's head of appeals, says the individual charities will still need donations for this purpose long after DEC has been wound up. "Hopefully, the immediate refugee crisis will be over in a matter of months," he says. "But in a year's time, there's still going to be vital work that needs to be done helping communities resettle and rebuild."

Figures from the UN High Commissioner for Refugees suggest that 400,000 people fled Kosovo in the two weeks to 5 April, with 30,000 crossing the border during a 12-hour period on Easter Monday alone.

In his Budget last month, Chancellor Gordon Brown announced plans to amend MGA so charities could claim back tax at the basic rate which applied when the first donation from a string of planned instalments was made. This means that instalments that started before 6 April 2000 - when the basic rate falls from 23 per cent to 22 per cent - will continue to get a boost from the tax man of pounds 29.87 for every pounds 100 you give right the way through to 31 December 2000.

Instalments started on, or after, 6 April 2000 will get only pounds 28.20 for every pounds 100 you give.

DEC donations (credit, debit and Charities Aid Foundation cards): 0870 606 0900. See also www.dec.org.uk and ITV Teletext page 520

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