News

Pre-Budget Report - impact on charities

Two announcements in the Chancellor of the Exchequer’s 2009 Pre-Budget Report point to possible future changes in charity tax reliefs.

Gift Aid

HM Treasury has been carrying out research into the effect which tax incentives have on the level of donations made by individuals to charity.  The results of the research are to be published in a joint Treasury/HM Revenue & Customs report on 15th December 2009.  The Government is currently considering the findings of the research and hopes that the report will stimulate discussion with a view to future reform of the Gift Aid regime. 

Substantial donor rules

The Government proposed to replace the substantial donor rules with a new test which is currently being developed. The purpose of the new test will be to deny tax relief on donations to charities where one of the donor’s main purposes is to obtain a return of value from the charity.  HM Revenue & Customs will work with the charity sector to produce draft legislation. 

Summary

Both of these announcements have a potential impact on tax reliefs for charities and donors to charity. The timing of any legislation to give effect to possible change is presently unknown. Unless progress can be made prior to the next General Election, it is possible that these proposals will not move forward until a new Government is in place. Much will then depend on any new administration’s legislative and budget priorities. 

For further comment on these announcements, or on any aspect of charity law and the charity tax regime, contact our Charities Legal Team on charities@turcanconnell.com.