Oxford's charities and churches are set to lose millions of pounds when the Government chops back its tax deal for them in three weeks.

Oxfam, based in Cowley, is among scores of charities which will be hit hard when three pence is cut from the rate they can claim back for every £1 declared under the tax relief scheme Gift Aid.

Currently every pound given to charity using Gift Aid is worth £1.28 but from April 5, this will drop to £1.25.

It is tied in to the reduction in the basic rate of income tax, meaning what can be claimed by a charity drops by 3p.

For Oxfam, which is the UK's second biggest claimer of Gift Aid, the money equates to the loss of all its emergency relief supplies held at its Bicester warehouse, weighing 220 tonnes.

Sioned Jones, head of business support at Oxfam, said: "It's an enormous loss of funds. Oxfam accounts for about 2.5 per cent of the total amount of Gift Aid that UK charities claim so those three pennies really do add up.

"Over the last six months we've been trying to find opportunities to make up for the funding loss and now we are trying to encourage as many of our donors as possible to give their money before the tax year changes on April 5 so we can still claim the current rate of tax.

"It's a massive funding gap. The tax cut was announced in the Budget last year but I don't think the impact of how it would affect charities was taken into account."

Cowley hospice Helen and Douglas House has estimated the tax changes will cost it £18,000, the equivalent of paying a nurse to care for a terminally ill child for seven months.

Head of fundraising Jo Mitchell said: "It will have a huge impact. We are so dependant on independent contributions and losing £18,000 makes it that much harder.

"It's a shame, it will make a big difference to us."

The Diocese of Oxford has calculated the county's churches are set to lose £110,000 over the next year.

They are now asking donors to increase their giving by three pence in every pound to make up for the loss.

Robin Brunner-Ellis, funding adviser for the diocese of Oxford, said: "This could mean cuts to vital mission and outreach work within the community, setbacks in repair programmes and an even harder struggle to pay the running costs, especially in smaller parishes. There's a danger churches and charities will miss out unless people adjust their giving to reflect the changes."

The Sir Michael Sobell House Hospice in Headington believe the change will cost them £4,000.

Her Majesty's Revenue and Customs refused comment yesterday.