The new uniform tax relief scheme for charitable donations announced in the Finance Bill is expected to generate tens of millions of pounds for charities and educational establishments.

The changes will provide for more tax-effective donations from individuals and the corporate sector.

The minimum donation that can attract relief will be £250 (#318) and the relief is available at the taxpayer's marginal rate of tax.

The Irish Charities Tax Reform Group (ICTRG) has welcomed the streamlining of the tax code for donations. The group's chairwoman, Ms Deirdre Mortell, said it was a major breakthrough and would be of immense benefit to charities. Until now the corporate sector was defined as limited companies only, but sole traders and partnerships are included under the overhauled tax relief system. Companies will be able to write off a donation as an ordinary trading expense, while the self-employed can claim the tax relief.

The charity or educational establishment benefits directly from the tax relief in the case of a donation from an individual who is not self-employed.

For example, a taxpayer on the higher rate of tax - currently 42 per cent - makes a £1,000 donation to their favourite registered charity or school. The Revenue Commissioners will take the tax that person has already paid on this amount - £420 - and give it to the charity or school.

Mr Barry Dempsey of the Irish Cancer Society said the new system was a strong opportunity for Irish charities. "People will continue to give as they have in the past and charities will benefit even more," he said.

The top up may also act as an incentive for donors to increase the sums they are giving annually to reach the threshold. There will be no upper limit on the total amount of relief afforded to individuals or companies.

To qualify for the tax relief, charities must be set up for at least three years with accounts filed for that period.

They must also be registered with the Revenue Commissioners.

In the case of direct debit donors paying a monthly amount, the tax relief will be applied to their total annual contribution if it is above the £250 threshold. First- and second-level schools and third-level institutions are included in the scheme, as are developing world and domestic charities.

A list of more than 360 registered charities is available on www.charitytaxre form.ie.

The next campaigning priority for the ICTRG is VAT. Unlike limited companies, charities with tax-exempt status cannot claim back VAT spent on goods and services.

This costs Irish charities an estimated £80 million each year.