LONDON. When UK public funding for the arts was cut by 30% last October, the question on everyone's mind was whether collectors would be able to make up the shortfall by increasing private donations such that the funding of cultural institutions would increasingly resemble that in the US. However, as this blog and many commentators pointed out, for this change in the funding structure to happen, the cut in public funding would have to be accompanied by the necessary tax incentives to induce charitable giving. The budget announced this week "unveiled several measures aimed at creating an incentive for would-be philanthropists to give more to culture" (more on the much-welcomed tax breaks from the FT.com).
As well as cutting inheritance tax by 10% for those who leave 10% of their estate to charity, the statement also "contained a long-called-for reform of Gift Aid." Gift Aid can now be claimed on small donations up to a total of £5,000 a year, per charity and much of the red tape surrounding Gift Aid has now disappeared (the government has created an online system as an alternative to filling out forms), cutting overhead costs for small organisations significantly.