Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN43 Charities: increase to gift aid benefit limits

Who is likely to be affected

1   Charities and Community Amateur Sports Clubs (CASCs) who provide benefits to recognise donations in excess of 1,000 and the individuals and companies who make those donations.

General description of the measure

2   For donations to charities to remain eligible for Gift Aid tax relief, there are proportional and overriding limits on the value of benefits that individuals and companies may receive as a result of making those donations. Legislation will be introduced in Finance Bill 2007 to double the proportional limit for donations in excess of 1,000, subject to the overriding limit which will also be doubled.

Operative date

3   The new measures have effect on and after 6 April 2007.

Current law and proposed revisions

Gift Aid for individuals

4   Chapter 2 Part 8 of Income Tax Act 2007 (ITA) allows donations by individuals to qualify for Gift Aid tax relief where the value of any benefit that may be received by the donor as a consequence of making the donation does not exceed certain proportional limits, subject to an overriding limit of 250.

5   Under section 418 of ITA, the current limits on the value of benefits received relative to donations are;

•   25% of the value of the donation, where the donation is less than 100

•   25, where the value of the donation is between 100 and 1,000

•   2.5% of the value of the donation, where the donation exceeds 1,000

6   For donations of more than 1,000, the limit on the value of benefits received will be increased from 2.5% to 5% of the donation, subject to the overriding limit (below).

7   The overriding limit on the value of benefits received by a donor in a tax year as a consequence of donations to a charity, will increase from 250 to 500

8   These new limits will come into effect for benefits received as a consequence of donations made on or after 6 April 2007.

Community Amateur Sports Clubs (CASCs)

9   For the purposes of Gift Aid, Para 9(1) of Schedule 18 to Finance Act 2002 treats registered CASCs as if they are charities so that donations by individuals to CASCs qualify for gift aid reliefs. The increase to the Gift Aid benefit limits will apply equally where individuals receive benefits as a consequence of making donations to CASCs.

10 These new limits will come into effect for benefits received as a consequence of donations made on or after 6 April 2007.

Gift Aid for companies

11 Section 339(3B) to section 339(3DD) of Income and Corporation Taxes Act 1988 replicate some of the provisions in Chapter 2 Part 8 ITA that are applicable for individuals and apply these to donations made by companies. The limits on benefits will be similarly increased to stay the same as those applicable for individuals.

12 These new limits will come into effect for benefits received as a consequence of making donations in an accounting period ending on or after 6 April 2007.

Further advice

13 If you have any questions about this change, please contact Jon Prothero on 020 7147 2785 (email: Jon.Prothero@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk