Charities

Gift aid

Donors will be able to receive benefits valued up to £2,500 as a result of making a donation to a charity of more than £10,000 under gift aid. However, the benefit must not exceed 5% of the gift. The measure has effect for individual donations from 6 April 2011 and for corporate donations from 1 April 2011.

From April 2013, a new scheme will allow charities to claim gift aid on up to £5,000 of small (£10 or less) donations without the need for gift aid declarations. An online system will be introduced in 2012/13 for charities to claim gift aid. To help fund this, the Government will withdraw the scheme by which individuals can donate tax repayments to charity under self-assessment. The withdrawal applies for repayments for 2011/12 onwards and tax returns up to 2010/11 where the repayment is made after 5 April 2012.

Gifts of works of art

The Government will consult over the summer on a proposal to encourage donations of pre-eminent works of art and historical objects to the nation in return for a tax reduction.

Substantial donors

New rules from April 2011 will deny relief where a donor enters into arrangements with the main purpose of obtaining a financial advantage from the charity. They will replace existing rules over a transitional period.

In-year repayments of income tax to charities

Provisions in the Finance Bill 2012 will replace an extra-statutory concession under which HMRC makes repayments of tax to certain charities without requiring a tax return to be completed.