Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN44 Charitable Lottery Tax Relief: Gambling Act 2005 consequentials

Who is likely to be affected?

1   Charities which raise funds by holding charitable lotteries.

General description of the measure

2   Legislation will be introduced in Finance Bill 2007 to ensure that charities continue to benefit from the existing relief from tax on the profits from certain lotteries in a new regulatory framework.

3   Certain lotteries are exempt from tax when the profits accrue to a charity. This relief is given in tax law by reference to the Lotteries and Amusements Act 1976 (LAA). The relevant provisions of that Act will shortly be repealed by the Gambling Act 2005. The Finance Bill legislation will amend tax law to refer to the equivalent sections of the 2005 Act.

4   The 2005 Act brings in a new licencing regime for some large lotteries. Where this licencing regime applies, relief will not be given for lotteries which do not have the required licence, as the lottery would be unlawful.

Operative date

5   This measure is effective from 1 September 2007, the date from which the relevant sections of the Gambling Act 2005 come into force.

Current law and proposed revisions

6   Section 505(1)(f) of the Income and Corporation Taxes Act 1988 (ICTA) gives tax relief for lotteries promoted and conducted in accordance with section 3 or 5 of the LAA, if the profits are applied solely to the charity's purposes. These are small lotteries run incidental to other events (such as fetes, bazaars and similar entertainments) and society lotteries run for charitable purposes.

7   This section will be amended to refer to Part 1 and Part 4 of Schedule 11, and Part 5, of the Gambling Act 2005. These sections refer to the same kinds of lotteries referenced above, in a slightly different format necessitated by the new licencing regime. Large society lotteries now require a licence under the 2005 Act.

8   Previously Section 505 (1)(f) has applied to both charitable trusts and charitable companies; following the passage of the Income Tax Act 2007 (ITA) (see below) that section, and any amendment to it, will only apply to charitable companies.

9   Section 530 (2) of ITA amends ICTA so that section 505(1)(f) only refers to charitable companies. The law allowing relief for charitable trusts is at section 530 of the ITA. This measure will amend section 530 (2) of that Act so that the law for charitable trusts is exactly equivalent to the law for charitable companies.

10 Both of these amendments will be activated by Treasury Order on 1 September 2007 so that they may come into force on the same day as the relevant provisions of the Gambling Act 2005.

Further advice

11 If you have any questions about this change, please contact the HMRC Charities helpline on 0845 302 0203. Information about Budget measures is available on the HM Revenue & Customs website at