A LOCAL charity says it stands to lose a "significant" amount of money as a result of chancellor Gordon Brown's budget this week.

Money given to UK charities is treated as if it has already had the basic rate of income tax deducted. Providing the donor agrees, the charity can claim back the tax in the form of gift aid.

But the with the budget cutting the basic income tax rate by 2p, to 20p in the pound, some good causes will be losing a substantial chunk of their income.

Gavin Fisher, deputy chief executive of the Dorset children's hospice Julia's House, said it expected to raise £25,000 from gift aid this year. "Obviously a reduction of just one per cent is a significant amount," he said.

"It's going to be different for every charity, depending on how much they depend on gift aid. A lot aren't making the most of gift aid - there's £600 million across charities nationwide unclaimed."

Julia's House is preparing a National Lottery bid amid fears that charities could lose out over the next few years as money is diverted towards the spiralling costs of staging the 2012 Olympics.

"I wouldn't say that the Olympics are a waste of money. It's just a shame that the lottery is having to bail out an ill-thought out plan," said Mr Fisher.

Poole Hospital operates a fundraising Wish List to buy key pieces of equipment for wards and departments. Trust spokeswoman Pauline Malins said: "We receive very little that's gift aided, so will probably lose less than £200. However we would still prefer more people to gift aid their donations as it's obviously beneficial to us."

Royal Bournemouth and Christchurch Hospitals Trust fundraiser Diana Newbury, who is currently working on the Jigsaw Appeal to extend and improve the cancer and blood disorders unit, said: "Any money that's lost is disappointing, but perhaps the fact that people's income tax has been reduced means they will give us higher donations."