Budget Announcements of Interest to Charities

Gift Aid on digital giving

The government announced that new legislation will be introduced in the Finance Bill 2015 to create a framework to allow non-charity intermediaries (for example, text donation operators or websites) to take a greater role in operating Gift Aid. The purpose of the proposed changes is to reduce the number of times a new Gift Aid declaration is made and to make it easier to claim Gift Aid on digital giving. The legislation will give the government power to introduce regulations to establish the roles and regulatory regimes for such non-charity intermediaries. Once the Finance Bill 2015 receives Royal Assent, the government will consult on draft regulations.

Charity donor benefits

The government is seeking to simplify the rules on the benefits which a donor may receive from a charity in connection with a donation they have made. The government will consult with stakeholders with a view to including new legislation in a future Finance Bill.

Support for small charities to claim tax reliefs

The government wants to encourage more donors to claim Gift Aid on eligible donations and encourage smaller charities to register for the reliefs they are entitled to. Its plans to achieve this though targeted outreach work, including setting up a “small charities outreach team” at HMRC, improving the general understanding of donor behaviour and it is understood, taking forward the proposal for a joint registration portal so charities can register with both the Charity Commission and with HMRC at the same time.

Cultural gifts scheme: increase in cap

The Cultural Gifts Scheme allows taxpayers to reduce their liability to income tax and capital gains tax in exchange for donating culturally pre-eminent assets to the nation, for example by gifting a valuable painting to an art gallery. When the scheme was introduced in April 2012, the government said it would consider increasing the cap in the future if taxpayer take-up was high, which appears to have been the case as the government has announced that the annual cap will be increased from £30 million to £40 million from 6 April 2014. The cap is shared with a similar scheme for making gifts of pre-eminent assets in lieu of paying inheritance tax.

Social investment tax relief rate

The government announced that 30 percent income tax relief will be available on the amount invested by an individual under the social investment tax relief scheme from 6 April 2014. Legislation providing a range of income and capital gains tax reliefs to encourage individuals to invest in social enterprises will be included in the Finance Bill 2014.

Various measures which will be introduced by the Finance Bill 2014

• Corporate Gift Aid is being extended to include gifts of money to community amateur sports clubs (CASCs) made on or after 1 April 2014.
• Schedule 8 to the Finance Act 2003 will be amended to clarify that partial relief from stamp duty land tax (SDLT) is available where a charity purchases an interest in land jointly, as tenants in common, with a non-charity.
• HMRC confirmed that the transfer of profits from a trading subsidiary to a charity under a deed of covenant or the Gift Aid scheme is not tax avoidance for the purposes of new anti-avoidance legislation on the transfer of corporate profits, as the trading subsidiary and the charity are “both taking advantage of tax reliefs which are intended to be used this way”.

IBB Solicitors’ specialist Charities Legal team has a wealth of experience in delivering practical commercial advice to charities and not for profit organisations, and those who work with them. For advice, contact a member of the team, call us on 08456 381 381 or email charities@ibblaw.co.uk