Part III

Income Tax, Corporation Tax and Capital Gains Tax
Chapter II

Other provisions

Giving to charity

Gift aid payments by individuals
39
1
Section 25 of the Finance Act 1990 (donations to charity by individuals) shall be amended in accordance with subsections (2) to (7) below.
2
In subsection (1)(c), for “an appropriate certificate” there shall be substituted “an appropriate declaration”.
3
In subsection (2)—
a
paragraphs (c) and (g) shall cease to have effect;
b
in paragraph (e), for “two and a half per cent of the amount of the gift” there shall be substituted “the limit imposed by subsection (5A) below”; and
c
for paragraph (i) there shall be substituted—
i
either—
i
at the time the gift is made, the donor is resident in the United Kingdom or performs duties which by virtue of section 132(4)(a) of the Taxes Act 1988 (Crown employees serving overseas) are treated as being performed in the United Kingdom; or
ii
the grossed up amount of the gift would, if in fact made, be payable out of profits or gains brought into charge to income tax or capital gains tax.
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4
For subsection (3) there shall be substituted—
3
The reference in subsection (1)(c) above to an appropriate declaration is a reference to a declaration which—
a
is given in such manner as may be prescribed by regulations made by the Board; and
b
contains such information and such statements as may be so prescribed.
3A
Regulations made for the purposes of subsection (3) above may—
a
provide for declarations to have effect, to cease to have effect or to be deemed never to have had effect in such circumstances and for such purposes as may be prescribed by the regulations;
b
require charities to keep records with respect to declarations given to them by donors; and
c
make different provision for declarations made in a different manner.
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5
After subsection (5) there shall be inserted—
5A
The limit imposed by this subsection is—
a
where the amount of the gift does not exceed £100, 25 per cent of the amount of the gift;
b
where the amount of the gift exceeds £100 but does not exceed £1,000, £25;
c
where the amount of the gift exceeds £1,000, 2.5 per cent of the amount of the gift.
5B
Where a benefit received in consequence of making a gift—
a
consists of the right to receive benefits at intervals over a period of less than twelve months;
b
relates to a period of less than twelve months; or
c
is one of a series of benefits received at intervals in consequence of making a series of gifts at intervals of less than twelve months,
the value of the benefit shall be adjusted for the purposes of subsection (4) above and the amount of the gift shall be adjusted for the purposes of subsection (5A) above.
5C
Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a gift which is one of a series of gifts made at intervals of less than twelve months, the amount of the gift shall be adjusted for the purposes of subsection (5A) above.
5D
Where the value of a benefit, or the amount of a gift, falls to be adjusted under subsection (5B) or (5C) above, the value or amount shall be multiplied by 365 and the result shall be divided by—
a
in a case falling within subsection (5B)(a) or (b) above, the number of days in the period of less than twelve months;
b
in a case falling within subsection (5B)(c) or (5C) above, the average number of days in the intervals of less than twelve months;
and the reference in subsection (5B) above to subsection (4) above is a reference to that subsection as it applies for the purposes of subsection (2)(e) above.
5E
In determining whether a gift to a charity falling within subsection (5F) below is a qualifying donation, there shall be disregarded the benefit of any right of admission received in consequence of the making of the gift—
a
to view property the preservation of which is the sole or main purpose of the charity; or
b
to observe wildlife the conservation of which is the sole or main purpose of the charity;
but this subsection shall not apply unless the opportunity to make gifts which attract such a right is available to members of the public.
5F
A charity falls within this subsection if its sole or main purpose is the preservation of property, or the conservation of wildlife, for the public benefit.
5G
In subsection (5E) above “right of admission” refers to admission of the person making the gift (or any member of his family who may be admitted because of the gift) either free of the charges normally payable for admission by members of the public, or on payment of a reduced charge.
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6
For subsections (6) to (9) there shall be substituted—
6
Where any gift made by the donor in a year of assessment is a qualifying donation, then, for that year—
a
the Income Tax Acts and the Taxation of Chargeable Gains Act 1992 shall have effect, in their application to him, as if—
i
the gift had been made after deduction of income tax at the basic rate; and
ii
the basic rate limit were increased by an amount equal to the grossed up amount of the gift;
b
the provisions mentioned in subsection (7) below shall have effect, in their application to him, as if any reference to income tax which he is entitled to charge against any person included a reference to the tax treated as deducted from the gift; and
c
to the extent, if any, necessary to ensure that he is charged to an amount of income tax and capital gains tax equal to the tax treated as deducted from the gift, he shall not be entitled to relief under Chapter I of Part VII of the Taxes Act 1988;
but paragraph (a)(ii) above shall not apply for the purposes of any computation under section 550(2)(a) or (b) of that Act (relief where gain charged at a higher rate).
7
The provisions referred to in subsection (6)(b) above are—
a
section 289A(5)(e) of the Taxes Act 1988 (relief under enterprise investment scheme);
b
section 796(3) of that Act (credit for foreign tax); and
c
paragraph 1(6)(f) of Schedule 15B to that Act (venture capital trusts).
8
Where the tax treated as deducted from a gift by virtue of subsection (6) above exceeds the amount of income tax and capital gains tax with which the donor is charged for the year of assessment, the donor shall be assessable and chargeable with income tax at the basic rate on so much of the gift as is necessary to recover an amount of tax equal to the excess.
9
In determining for the purposes of subsection (8) above the total amount of income tax and capital gains tax with which the donor is charged for the year of assessment, there shall be disregarded—
a
any tax charged at the basic rate by virtue of—
i
section 348 of the Taxes Act 1988 (read with section 3 of that Act); or
ii
section 349 of that Act (read with section 350 of that Act);
b
any tax treated as having been paid under—
i
section 233(1)(a) of that Act (taxation of certain recipients of distributions);
ii
section 249(4)(a) of that Act (stock dividends treated as income); or
iii
section 547(5)(a) of that Act (method of charging life policy gain to tax);
c
any relief to which section 256(2) of that Act applies (relief by way of income tax reduction);
d
any relief under—
i
section 347B of that Act (relief for maintenance payments);
ii
section 788 of that Act (relief by agreement with other countries); or
iii
section 790(1) of that Act (unilateral relief);
e
any set off of tax deducted, or treated as deducted, from income other than—
i
tax treated as deducted from income by virtue of section 421(1)(a) of that Act (taxation of borrower when loan released etc); or
ii
tax treated as deducted from a relevant amount within the meaning of section 699A of that Act (untaxed sums comprised in the income of an estate) except to the extent that the relevant amount is or would be paid in respect of a distribution chargeable under Schedule F; and
f
any set off of tax credits.
9A
For the purposes of sections 257(5) and 257A(5) of the Taxes Act 1988 (age related allowances), the donor’s total income shall be treated as reduced by the aggregate amount of gifts from which tax is treated as deducted by virtue of subsection (6) above.
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7
In subsection (12), paragraphs (b) and (e) and the word “and” immediately preceding paragraph (e) shall cease to have effect.
8
In subsections (1)(b) and (3)(b) of section 257BB of the Taxes Act 1988 (transfer of relief under section 257A where relief exceeds income), after “section 256(2)(b)” there shall be inserted “(read with section 25(6)(c) of the Finance Act 1990 where applicable)”.
9
In paragraph 4(1)(b) of Schedule 13B to that Act (children’s tax credit), after “section 256(2)(b)” there shall be inserted “(read with section 25(6)(c) of the Finance Act 1990 where applicable)”.
10
This section has effect in relation to—
a
gifts made on or after 6th April 2000 which are not covenanted payments; and
b
covenanted payments falling to be made on or after that date;
and any regulations made under subsection (3) of section 25 of the Finance Act 1990 (as substituted by subsection (4) above) within three months of the passing of this Act may be so made as to apply to any payments in relation to which this section has effect.
1990 c. 29.
1992 c. 12.
1990 c. 29.
1990 c. 29.
1990 c. 29.