Chancellor of the Exchequer George Osborne made a number of announcements in his Autumn Statement today which impact on charities and philanthropy, including:-
- Improvements and simplifications to Gift Aid;
- Adjustments to other charitable giving incentives;
- Easier registration of charities in England and Wales (but no progress in Scotland);
- Extension of charity relief on some English and Welsh property transactions;
- Promotion of tax relief on social investment; and
- A clampdown on tax avoidance through charitable vehicles.
Improving Gift Aid
The Chancellor has announced that he wishes as many eligible donations to charity as possible to secure tax relief under the Gift Aid scheme. Despite the National Audit Office's recent report which suggested that Gift Aid does not incentivise giving to charity, the government is keen to support Gift Aid as a valuable tax relief, encouraging philanthropy by millions of people across the UK each year.
A new working group is proposed to explore a simplified model Gift Aid declaration in order to make it easier to understand, and new promotional material will be developed in order to promote the take-up of Gift Aid. These and other potential simplifications will be consulted on further before any changes are made to the Gift Aid legislation.
Other incentives to give to charity
The Cultural Gifts Scheme, which introduced for the first time the ability to secure tax relief on gifts of chattels to the Nation, will be amended in order to ensure that Estate Duty is"brought into charge where appropriate" – further detail on what this announcement means is expected in the Budget next spring and in the 2014 Finance Bill.
From April 2014, donations by companies to Community Amateur Sports Clubs (CASCs) will be covered under the corporate Gift Aid scheme (this relief is not presently available for corporate donations to CASCs). This change follows a recent consultation and legislative changes required will be made in the 2014 Finance Bill.
Easier registration of new charities
A single portal for online applications for charitable status is to be developed by HM Revenue & Customs (HMRC), in order to combine applications to the Charity Commission and HMRC in one single application process. This long awaited simplification of the charity registration process will only affect charities being registered in England and Wales, but it is hoped that progress can be made with single applications in Scotland and in Northern Ireland, where the process to register a charity can presently take in excess of six months, particularly given the very slow registration process at HMRC.
Property tax relief for charities
The government intends to pass legislation in order to clarify that partial relief from Stamp Duty Land Tax (SDLT) will be available where a property is purchased jointly by a charity and a non-charity. Relief will be available to the charity in such circumstances on the proportion of the purchase price which is attributable to the charity. This relief will primarily affect charity property transactions in England and Wales, since SDLT is about to be abolished in Scotland and replaced by Land and Buildings Transaction Tax (LBTT). The Chancellor's announcement is a departure from the position in Scotland, where the Scottish Parliament has made no special provision for partial relief in the case of joint charity and non-charity purchases.
Social investment tax relief
The government proposes to introduce a new tax relief for investments in social enterprises with effect from April 2014. The social investment sector has been pushing for tax relief on social enterprises for some years now and this announcement will be welcomed by many in the third sector. Eligible bodies will include charities, community interest companies and community benefit societies. A roadmap for the planning of the new relief is due to be published in January.
Legislation will be introduced as part of the 2014 Finance Bill to clamp down on tax avoidance through charitable vehicles. The changes proposed will amend the definition of charity for anti-avoidance purposes in order to put beyond doubt the circumstances in which charities may not be eligible for tax relief. Draft legislation will be published after the spring Budget.
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