1.This section amends Chapter 2 of Part 8 of the Income Tax Act 2007 (ITA 2007). It will enable regulations to be made which make it easier for donors to give to charity through an intermediary, such as an independent fund raiser. The regulations will ease the administrative burden on intermediaries by relieving them of the need to receive a Gift Aid declaration for each individual charity a donor gives to through them. They will similarly ease the process for donors giving to multiple charities via a single intermediary.
2.Chapter 2 of Part 8 of ITA 2007 (ITA) provides for and regulates Gift Aid. Gift Aid is a tax relief which, subject to certain conditions, charities and Community Amateur Sports Clubs can claim on gifts of cash from donors who pay income tax at basic or higher rates. Such gifts are referred to as `qualifying donations`.
3.Section 416 of ITA gives the meaning of qualifying donation and sets out the conditions a donation must fulfil to be a qualifying donation. Amongst other things, a qualifying donation must be the subject of a declaration given by the donor to the charity. This is called a Gift Aid Declaration (GAD).
4.Section 428 of ITA gives the meaning of GAD. In accordance with section 428 ITA, a GAD must contain information that is required under the regulations relating to GADs. There are other requirements in section 428, but these are not relevant to this measure and are not discussed further in this note.
5.The regulations which have been made under section 428 and which are currently in force are The Donations to Charity by Individuals (Appropriate Declarations) Regulations 2000.
6.Subsection (2)(a) amends section 416 of ITA 2007 (the meaning of qualifying donation) by inserting provisions for Gift Aid Declarations (GADs) to be made by an intermediary acting on behalf of an individual making a gift and to be given to an intermediary acting on behalf of a charity.
7.Subsection (2)(b) inserts a new section 416(1A) ITA which sets out what an intermediary is, and allows for the scenario where an intermediary acts on behalf of both the individual and the charity.
8.Subsection (3) of the draft section inserts:
new section 428(3)(a) of ITA which provides for the regulations which set out the requirements for intermediaries and charities to keep necessary records with respect to GADs;
new section 428(3)(b) of ITA which provides for the regulations to require intermediaries and charities to produce such records for inspection by an officer of HM Revenue & Customs; and
new section 428(3)(c) of ITA which provides for the regulations to require intermediaries to provide certain information to donors at times to be specified.
9.Subsection (3) of the section also inserts a new section 428(4) of ITA which enables the regulations to make differing provisions for different cases or circumstances, including, but not limited to, depending who makes and who receives the GAD.
10.The amendments will have effect in relation to gifts made on or after a day appointed by regulations made by HM Treasury. It is expected that such day will coincide with the making of the new GAD regulations relating to intermediaries.
11.The government’s Gift Aid policy objective is to see Gift Aid claimed on as many eligible donations as possible.
12.This section introduces primary legislation that formalises the roles of intermediaries in the Gift Aid. The measure will allow intermediaries to have a greater role in processing Gift Aid claims on behalf of charities. The regulations to implement the change will be brought forward next year.
13.The measure is specifically targeted at relieving the need to receive a Gift Aid Declaration from a donor for each donation an individual gives to charity through an intermediary. The process for donors of giving to multiple charities via a single intermediary will also be eased.
14.This measure was announced at Budget 2013. A consultation Gift Aid and digital giving ran from July to September 2013, this was followed by confirmation at Budget 2014 that the government would legislate, in Finance Act 2015, to allow a greater role for intermediaries.