Finance Act 2011

Treatment of substantial donor transactions

29 (1) For the purposes of section 549(2) of ITA 2007 (meaning of substantial donor), relievable gifts (within the meaning of section 550 of that Act) received by a charitable trust on or after 1 April 2011 are to be disregarded.

(2) Sub-paragraphs (3) and (4) apply where—

(a) a substantial donor transaction is entered into before, or on or after 1 April 2011, and

(b) that transaction is not tainted.

(3) Where a payment made on or after 1 April 2011 by a charitable trust to a substantial donor in the course of, or for the purposes of, the substantial donor transaction would (in the absence of this sub-paragraph) be treated under section 551(1) or (5) of ITA 2007 as non-charitable expenditure, that payment is not to be so treated.

(4) Where, as a result of the substantial donor transaction, non-charitable expenditure would (in the absence of this sub-paragraph) be treated as incurred under section 551(2) of that Act on or after 1 April 2011, that expenditure is not to be treated as so incurred.

(5) A substantial donor transaction is “tainted” if (and only if) it is reasonable to assume from—

(a) the likely effects of the relevant relievable gifts and the substantial donor transaction, and

(b) the circumstances in which the relevant relievable gifts were made and the circumstances in which the substantial donor transaction was entered into,

that the relevant relievable gifts (or one or more of them) would not have been made and the transaction would not have been entered into independently of one another.

(6) In this section—

• “relevant relievable gifts”, in relation to the substantial donor transaction, means the relievable gifts by reason of which a person is a substantial donor and the transaction is a substantial donor transaction;

• “relievable gift” has the meaning given by section 550 of ITA 2007;

• “substantial donor” and “substantial donor transaction” have the meaning given by section 549 of that Act.