Gift aid reform will likely take the shape of either simplification or the introduction of a composite rate, it has emerged after the new government held its first Gift Aid Forum meeting yesterday.

Economic secretary Justine Greening and minister for civil society Nick Hurd (pictured) met with sector leaders at the Treasury yesterday to map out the future path of gift aid reform, setting plans to release a report in September and include a gift aid announcement in next year’s Budget.

Louise Richards, director of policy and campaigns at the Institute of Fundraising – one of the bodies involved in the talks, said the two main reforms now being considered are simplifying gift aid or replacing the current system which offers higher rate taxpayers the opportunity to claim back extra tax with a composite rate, which would introduce a flat rate of gift aid to all donations.

The talks, said Richards, “didn’t make any real progress, but things were put on the table”.

She said that the Institute is still pushing for the extension of transitional relief rate of gift aid beyond its April 2011 end date, but was not optimistic. “We’re calling for it, but we’re certainly not confident [the government] are going to do it,” she said.

Richards said that after three years of stagnation under Labour, she hopes the coalition government will be more decisive on making gift aid more powerful.

Greening moved to reassure the sector that the government is listening on matters of reform. “This group is about finding even better ways of making gift aid work,” she said.

“My commitment to you is that I will be open minded about the change that's needed. I am keen to hear your views both about fundamental policy change and more practical process change.

“I hope that by working together we will find practical and sector-led solutions that work for charities and for government in these challenging times.”