A factsheet intended to provide guidance on Gift Aid; Inheritance Tax; payroll giving; tax relief on shares; land or buildings and personal charitable trusts.
For many years the Government has been committed to creating and sustaining an environment which offers tax incentives to individuals to make gifts to charities. There are several tax efficient ways in which an individual can give to charity.
A new measure to incentivise charitable giving on death was introduced on 6th April 2012. Where someone dies on or after that date and leaves at least 10% of their net estate to a qualifying charity or charities, the rate of inheritance tax on the chargeable part of their estate is reduced from 40% to 36%.
There are nearly 24,000 charities in Scotland and every year around 750 to 900 new charities are created. This briefing note sets out some key information on the creation of a new Scottish charity.
All Scottish charities are obliged to prepare a set of financial accounts each year and to lodge those accounts with the Office of the Scottish Charity Regulator (OSCR). Regulations govern the format in which accounts should be presented, the level of external scrutiny which is required, and other duties in relation to the preparation of accounts.
Community Development Trusts are becoming an increasingly prominent part of Scotland’s charity sector. They are frequently small to medium sized operations, often with charitable status, aimed at benefiting the local community which they are created to serve. They are run by the community for the community.
The Finance Act 2012 introduced a tax incentive to promote gifts of heritage to the nation or for public benefit. The Cultural Gifts Scheme opened for applications in March 2013 and runs, alongside the existing Acceptance in Lieu (AIL) Scheme which covers gifts in lieu of Inheritance Tax.
The Nature of Legal Rights Under Scots law a surviving spouse, civil partner and children are entitled to certain legal rights when a person dies with or without a will. These rights are known as Legal Rights. Legal rights do not extend to unmarried partners or cohabitants. However, where a cohabitant dies without a will, the surviving cohabitant is able to make an application to the court for a share of the deceased partner’s estate.
A Royal Charter or Charter of Incorporation can only be granted by the Crown. Historically, Royal Charters were used prior to the introduction of incorporation by registration. That type of registration is now contained in the Companies Acts. Prior to registration under the Companies Acts, Royal Charters were the most common method of incorporation, the other method being by a Special Act of Parliament.
What is a SCIO? A Scottish Charitable Incorporated Organisation, or SCIO, is the newest type of charitable vehicle available in Scotland. They were created by the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act). SCIOs are specially designed for the charity sector. SCIOs resemble charitable companies in some respects, but unlike charitable companies they are only regulated by the Office of the Scottish Charity Regulator (OSCR) and not by Companies House.
In April 2015, Stamp Duty Land Tax (SDLT) was abolished for Scottish purposes and will be replaced by a new property tax. The new property tax is known as Land and Buildings Transaction Tax (LBTT), the provisions for which are contained in the Land and Buildings Transaction Tax (Scotland) Act 2013 (the 2013 Act).
Since 6th April 2013, charities in receipt of small donations have been able to claim a top-up tax relief under the Gift Aid scheme. The Small Charitable Donations Act 2012, which applies to charities and Community Amateur Sports Clubs (CASCs), allows tax relief on small cash donations of £20 or less, subject to an upper limit in any one tax year of £5,000 of small donations: a potential extra tax reclaim each year of up to £1,250. The rates would be increase with effect from April 2016 to an upper limit of £8,000 of small donations, producing a tax reclaim of £2,000. This rate refers to the rates which apply from April 2016 onwards.
Charity trustees are, naturally, keen to ensure the efficient and cost effective administration of their charity by maximising the resources available for charitable purposes and minimising unproductive time commitments for volunteer trustees. Running an office can involve considerable expense and administrative burdens and, as matter of risk management, trustees may well have concerns about a small “stand alone” office.
The Land Reform (Scotland) Bill, introduced into the Scottish Parliament on 22nd June 2015, contains a wide duty of community engagement which could have an impact on all charities owning land in Scotland.