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Income Tax Bill


Income Tax Bill
Part 8 — Other reliefs
Chapter 2 — Gift aid

227

 

(6)   

For the purposes of this section a person is treated as being entitled to a tax

reduction under section 788 of ICTA if the person is entitled to credit against

income tax under double taxation arrangements.

Election to carry back relief

426     

Election by donor: gift treated as made in previous tax year

5

(1)   

If—

(a)   

an individual makes a gift to a charity that is a qualifying donation, and

(b)   

the condition in subsection (2) is met,

   

the individual may elect to be treated as if the gift had been made in the

previous tax year (“year P”).

10

(2)   

The condition is that the individual’s charged amount for year P (see section

427) is at least equal to the increased total of gifts.

(3)   

If an election is made, sections 414 and 423 to 425 have effect in relation to the

individual as if the gift were a qualifying donation made by the individual in

year P.

15

(4)   

The increased total of gifts is the sum of—

(a)   

the grossed up amount of the gift, and of any gifts that are the subject

of the same election or an election made at the same time,

(b)   

the sum of the grossed up amounts of any gifts to charities made by the

individual in year P which—

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(i)   

are qualifying donations, and

(ii)   

are not themselves treated as made in the tax year before year P

because of an election under this section, and

(c)   

the sum of the grossed up amounts of any gifts which, as a result of an

earlier election under this section, are treated as made in year P.

25

(5)   

The grossed up amount of the gifts mentioned in paragraphs (a) and (c) of

subsection (4) is to be determined as if the gifts were made in year P.

(6)   

An election must be made—

(a)   

on or before the date on which the individual delivers a return for year

P under section 8 of TMA 1970 (personal return), and

30

(b)   

not later than the normal self-assessment filing date for year P.

(7)   

An election does not affect the position of the recipient of the gift (see section

520 (gifts to charitable trusts: income tax treated as paid) and section 25(10) of

FA 1990 (gifts to charitable companies)).

(8)   

This section does not apply to gifts which are treated as qualifying donations

35

under section 429 (giving through self-assessment return).

Supplementary

427     

Meaning of “charged amount”

(1)   

For the purposes of this Chapter, an individual’s charged amount is the

amount calculated as follows.

40

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 2 — Gift aid

228

 

(2)   

Calculate the amount of the individual’s modified net income for year X (see

section 1025).

(3)   

Calculate the amount on which the individual is chargeable to capital gains tax

for year X.

(4)   

Add together the amounts calculated under subsections (2) and (3).

5

   

The result is the individual’s charged amount for year X.

428     

Meaning of “gift aid declaration”

(1)   

In this Chapter “gift aid declaration” means a declaration which—

(a)   

is given in the manner specified by regulations made by the

Commissioners for Her Majesty’s Revenue and Customs, and

10

(b)   

contains any information and any statements required by the

regulations.

(2)   

The regulations may provide for declarations—

(a)   

to have effect,

(b)   

to cease to have effect, or

15

(c)   

to be treated as never having had effect,

   

in any circumstances and for any purposes specified by the regulations.

(3)   

The regulations may—

(a)   

require charities to keep records with respect to declarations received

from individuals, and

20

(b)   

make different provision for declarations made in a different manner.

429     

Giving through self-assessment return

(1)   

This section applies if—

(a)   

as a result of a personal return for a tax year being made by an

individual, a tax repayment for one or more tax years falls to be made

25

to the individual, and

(b)   

conditions A and B are met.

(2)   

Condition A is that the personal return contains a single direction, in the form

specified in the return, requiring—

(a)   

the whole of the tax repayment, or so much of it as does not exceed a

30

specified amount, to be paid on the individual’s behalf as a gift to a

single listed charity which is specified in the return, and

(b)   

the gift to be treated as a qualifying donation for the purposes of this

Chapter.

(3)   

Condition B is that the gift meets Conditions A to G mentioned in section 416.

35

(4)   

The gift is to be treated for the purposes of this Chapter as a qualifying

donation made by the individual at the time the payment is received by the

charity.

(5)   

In this section—

“listed charity” means a charity which, at the time the personal return is

40

made, is included (at the request of the charity) in a list maintained for

the purposes of this section by the Commissioners for Her Majesty’s

Revenue and Customs,

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

229

 

“personal return” means a return under section 8 of TMA 1970,

“tax repayment” means a repayment (after any set-off that falls to be made

against the individual’s liabilities) of either or both of—

(a)   

income tax or amounts paid on account of income tax, and

(b)   

capital gains tax,

5

and, for the purposes of subsection (2)(a), includes any repayment

supplement (within the meaning of section 824 of ICTA or section 283

of TCGA 1992).

430     

“Charity” to include exempt bodies

(1)   

In this Chapter “charity” includes—

10

(a)   

the Trustees of the National Heritage Memorial Fund,

(b)   

the Historic Buildings and Monuments Commission for England,

(c)   

the National Endowment for Science, Technology and the Arts, and

(d)   

a club that is registered as a community amateur sports club for the

purposes of Schedule 18 to FA 2002.

15

(2)   

For the purposes of the application of section 414(1) in relation to clubs that are

charities as a result of subsection (1)(d) of this section, membership fees are not

gifts.

Chapter 3

Gifts of shares, securities and real property to charities etc

20

Entitlement to relief

431     

Relief for gifts of shares, securities and real property to charities etc

(1)   

An individual who disposes of the whole of the beneficial interest in a

qualifying investment (see section 432) to a charity is entitled to relief if—

(a)   

the disposal is otherwise than by way of a bargain made at arm’s

25

length, and

(b)   

the individual makes a claim.

(2)   

The relief is given by deducting the relievable amount in calculating the

individual’s net income for the tax year in which the disposal is made (see Step

2 of the calculation in section 23).

30

(3)   

For the calculation of the relievable amount, see section 434.

(4)   

If the qualifying investment is a qualifying interest in land (see section 433),

this section is subject to—

section 441 (certificates),

section 442 (qualifying interests in land held jointly),

35

section 443 (calculation of relievable amount where joint disposal), and

section 444 (disqualifying events).

(5)   

See section 446 for bodies that are treated as charities for the purposes of this

Chapter.

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

230

 

(6)   

See subsection (7) of section 535 of ITTOIA 2005 (top slicing relief) for provision

about how relief under this Chapter is to be ignored for the purpose of

calculating relief under that section.

432     

Meaning of “qualifying investment”

(1)   

In this Chapter “qualifying investment” means—

5

(a)   

shares or securities which are listed or dealt in on a recognised stock

exchange,

(b)   

units in an authorised unit trust,

(c)   

shares in an open-ended investment company,

(d)   

an interest in an offshore fund, and

10

(e)   

a qualifying interest in land.

(2)   

In this section—

“offshore fund” has the same meaning as in Chapter 5 of Part 17 of ICTA

(see sections 756A to 756C of that Act), and

“open-ended investment company” is to be read in accordance with

15

section 468A(2) to (4) of ICTA.

433     

Meaning of “qualifying interest in land”

(1)   

In this Chapter “qualifying interest in land” means—

(a)   

a freehold interest in land in the United Kingdom, or

(b)   

a leasehold interest in land in the United Kingdom which is a term of

20

years absolute.

   

This is subject to subsections (2) to (5).

(2)   

Subsection (3) applies if an individual with a beneficial interest in a freehold or

leasehold interest mentioned in subsection (1)(a) or (b) makes a disposal to a

charity of—

25

(a)   

the whole of the beneficial interest, and

(b)   

an easement, servitude, right or privilege so far as benefiting the land

in question.

(3)   

The disposal mentioned in subsection (2)(b) is regarded for the purposes of this

Chapter as a disposal by the individual of the whole of the individual’s

30

beneficial interest in a qualifying interest in land separate from the disposal

mentioned in subsection (2)(a).

(4)   

If an individual who has a freehold or leasehold interest in land in the United

Kingdom grants a lease for a term of years absolute to a charity of the whole or

part of that land, the grant of the lease is regarded for the purposes of this

35

Chapter as a disposal by the individual of the whole of the beneficial interest

in the leasehold interest so granted.

(5)   

Neither an agreement to acquire a freehold interest nor an agreement for a

lease is a qualifying interest in land.

(6)   

In the application of this section to Scotland—

40

(a)   

references to a freehold interest in land are to the interest of the owner,

(b)   

references to a leasehold interest in land which is a term of years

absolute are to a tenant’s right over or interest in a property subject to

a lease,

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

231

 

(c)   

references to an agreement for a lease do not include missives of let that

constitute an actual lease, and

(d)   

in subsection (4) the reference to granting a lease for a term of years

absolute is to granting a lease.

Amount of relief

5

434     

The relievable amount

(1)   

If the disposal is a gift, the relievable amount is given by the formula—equation: plus[char[V],times[char[I],char[C]],minus[char[B]]]

   

where—

V is the value of the net benefit to the charity at, or immediately after, the

time when the disposal is made, whichever is less,

10

IC is the amount of the incidental costs of making the disposal to the

individual making it, and

B is the total value of any benefits received in consequence of making the

disposal by the individual making the disposal or a person connected

with the individual.

15

(2)   

If the disposal is at an undervalue, the relievable amount is given by the

formula—equation: plus[char[E],char[C],minus[char[B]]]

   

where—

E is the amount (if any) by which V (as defined in subsection (1)) exceeds

the amount or value of the consideration for the disposal,

20

C is given by subsection (4), and

B is as defined in subsection (1).

(3)   

But if the amount given by the formula in subsection (1) or (2) is a negative

amount, the relievable amount is nil.

(4)   

C is found by taking the following steps.

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Step 1

   

Calculate the consideration for which the disposal is treated as made for the

purposes of TCGA 1992 as a result of section 257(2)(a) of that Act (in case of

disposal to charity etc, consideration to be such that no gain or loss accrues).

Step 2

30

   

Find the excess (if any) of the amount calculated at Step 1 over the amount or

value of the consideration for the disposal.

   

If there is such an excess, C is the amount of that excess or, if less, the amount

of the incidental costs of making the disposal to the individual making it.

   

If there is no such excess, C is nil.

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(5)   

This section needs to be read with—

(a)   

section 435 (incidental costs of making disposal),

(b)   

section 436 (consideration), and

(c)   

sections 437 to 440 (value of net benefit to charity).

 
 

 
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