Finance (No. 3) Bill

Session 2010 - 11
Internet Publications
Other Bills before Parliament

Finance (No. 3) Bill

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 3 — Capital gains tax
126

Supplementary
939G
Connected charities

For the purposes of this Part, a “connected charity” in relation to
another charity means a charity which is connected with that other
charity in a matter relating to the structure, administration or control
5
of either charity.
939H
Connected persons
(1)
Section 1122 (meaning of “connected” persons) applies for the
purposes of this Part (except section 939G), but subject to the
following modification.
10
(2)
Section 1122 has effect as if after subsection (8) there were inserted—
“(9)
A person who is a beneficiary of a settlement is connected
with—
(a) a person in the capacity as trustee of the settlement, and
(b) the settlor in relation to the settlement.
15
(10)
For the purposes of this section—
(a) a man and woman living together as husband and wife are
treated as if they were husband and wife,
(b) two people of the same sex living together as if they were civil
partners of each other are treated as if they were civil partners
20
of each other, and
(c) “close company” includes a company that would be a close
company if it were resident in the United Kingdom.”
939I
Minor definitions
(1)
In this Part—
25
“arrangements” includes any scheme, arrangement or
understanding of any kind, whether or not legally
enforceable, involving a single transaction or two or more
transactions;
“charity” includes a registered club within the meaning of
30
section 658(6) (meaning of “community amateur sports club”
and “registered club”).
(2)
In this Part, in the case of a charitable trust, references to a charity
being entitled to a repayment of tax are to be read as references to the
trustees of the trust being so entitled.”
35
Part 3
Capital gains tax
3
After section 257 of TCGA 1992 insert—
“257A
Tainted charity donations
(1)
Section 257 does not apply in relation to—
40
(a)
a tainted donation made by a person, or
(b)
any associated donation.

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 4 — Consequential amendments
127

(2)
For the purposes of this section—
(a)
“tainted donation” means a tainted donation within the
meaning of Chapter 8 of Part 13 of ITA 2007 (tainted charity
donations: removal of income tax reliefs etc) or Part 21C of
CTA 2010 (tainted charity donations: removal of corporation
5
tax relief), and
(b)
“associated donation” means an associated donation within
the meaning of section 809ZM of ITA 2010 or section 939F of
CTA 2010.”
Part 4
10
Consequential amendments
Capital Allowances Act 2001
4
In section 63 of CAA 2001 (cases in which disposal value is nil), in subsection
(4)—
(a)
after “Subsection (2)” insert “—
15
(a)
”, and
(b)
at the end insert “, and
(b)
is subject to section 809ZM of ITA 2007 and section
939F of CTA 2010 (removal of tax relief in respect of
tainted charity donations etc).”
20
Income Tax (Employment and Pensions) Act 2003
5
In section 713 of ITEPA 2003 (donations to charity: payroll deduction
scheme), after subsection (5) insert—
“(6)
This section is subject to section 809ZM of ITA 2007 (removal of
income tax relief in respect of tainted charity donations etc).”
25
Income Tax (Trading and Other Income) Act 2005
6
In section 108 of ITTOIA 2005 (gifts of trading stock to charities etc), in
subsection (5)—
(a)
after “This section” insert “—
(a)
”, and
30
(b)
at the end insert “, and
(b)
is subject to section 809ZM of ITA 2007 (removal of
income tax relief in respect of tainted charity
donations etc).”
Income Tax Act 2007
35
7
ITA 2007 is amended as follows.
8
In section 30 (calculation of income tax liability: additional tax)—
(a)
in subsection (1) before the entry for section 205 of FA 2004 insert—
“section 809ZN (tainted gift aid donations: charge to
tax),
40
section 809ZO (tainted charity donations by trustees:
charge to tax),”, and

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 4 — Consequential amendments
128

(b)
for subsection (2) substitute—
“(2)
If the taxpayer is a trustee, the provisions referred to at Step
7 of the calculation in section 23 are—
section 496 (discretionary payments by trustees: tax pool
adjustment),
5
section 809ZN (tainted gift aid donations: charge to tax),
and
section 809ZO (tainted charity donations by trustees:
charge to tax).”
9
In section 58 (meaning of “adjusted net income), at the end insert—
10
“(4)
Subsection (6) of section 809ZM (removal of income tax relief in
respect of tainted donations etc) excludes certain donations from
being deducted at step 2 in subsection (1).”
10
In section 413 (gift aid: overview of Chapter), after subsection (4) insert—
“(4A)
This Chapter is subject to section 809ZM (removal of income tax
15
relief in respect of tainted charity donations etc).”
11
In section 431 (gifts of shares, securities and real property to charities etc),
after subsection (6) insert—
“(7)
This Chapter is subject to section 809ZM (removal of income tax
relief in respect of tainted charity donations etc).”
20
12
In section 543 (meaning of “non-charitable expenditure”), omit subsection
(1)(g) and (h).
13
Sections 549 to 557 (substantial donor transactions) are repealed.
14
In Schedule 2 (transitionals and savings), omit paragraphs 105 and 106.
15
In Schedule 4 (index of defined expressions), at the appropriate places
25
insert—

“arrangements (in Chapter 8 of Part 13)
section 809ZR”

“charity (in Chapter 8 of Part 13)
paragraph 1 of

Schedule 6 to

FA 2010 (and

30

see also section

809ZR)”

“the donor (in Chapter 8 of Part 13)
section

809ZJ(3)”

“potentially advantaged person (in
section

35

Chapter 8 of Part 13)
809ZJ(5)”

“relievable charity donation (in Chapter 8
section

of Part 13)
809ZI(1)”

“tainted donation (in Chapter 8 of Part 13)
section 809ZJ”.

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 4 — Consequential amendments
129

Housing and Regeneration Act 2008
16
In Schedule 9 (amendment of enactments: Part 1), omit paragraph 34.
Corporation Tax Act 2009
17
In section 105 of CTA 2009 (gifts of trading stock to charities etc), in
subsection (6) after “charity)” insert “and section 939F of that Act (removal
5
of corporation tax relief in respect of tainted charity donations etc)”.
18
In Schedule 1 (minor and consequential amendments), omit paragraphs 703
and 704.
Corporation Tax Act 2010
19
CTA 2010 is amended as follows.
10
20
In section 1 (overview of Act), in subsection (4)—
(a)
in the opening words for “21” substitute “21C”, and
(b)
after paragraph (j) insert “, and
(k)
tainted donations made to charities (see Part 21C).”
21
In section 189 (relief for qualifying charitable donations), in subsection (5)
15
for “any” substitute “section 939F and to any other”.
22
In section 496 (meaning of “non-charitable expenditure”), omit subsection
(1)(e) and (f).
23
Sections 502 to 510 (substantial donor transactions) are repealed.
24
In Schedule 1 (minor and consequential amendments), omit paragraphs 532
20
to 535.
25
In Schedule 2 (transitionals and savings etc), omit paragraphs 73 to 76.
26
In Schedule 4 (index of defined expressions), at the appropriate places
insert—

“arrangements (in Part 21C)
section 939I”

25

“charity (in Part 21C)
paragraph 1 of

Schedule 6 to

FA 2010 (and

see also section

939I)”

30

“the donor (in Part 21C)
section

939C(3)”

“potentially advantaged person (in Part
section

21C)
939C(5)”

“relievable charity donation (in Part 21C)
section

35

939B(1)”

“tainted donation (in Part 21C)
section 939C”.

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 5 — Commencement and transitional provision
130

Part 5
Commencement and transitional provision
Commencement
27    (1)
Subject to sub-paragraph (2), the amendments made by this Schedule have
effect in relation to relievable charity donations made on or after 1 April
5
2011.
      (2)
The repeals made by paragraphs 12 to 14, 16, 18 and 22 to 25 have effect in
relation to any transaction, other than an excluded transaction, occurring on
or after 1 April 2013.
      (3)
A transaction is “excluded” if it is entered into in pursuance of a contract
10
made before 1 April 2013, other than in pursuance of a variation of the
contract made on or after that date.
Treatment of existing arrangements
28
In the amendments made by Parts 1 and 2 of this Schedule, references to
arrangements include arrangements made, or made and implemented,
15
before 1 April 2011.
Treatment of substantial donor transactions
29    (1)
For the purposes of section 549(2) of ITA 2007 (meaning of substantial
donor), relievable gifts (within the meaning of section 550 of that Act)
received by a charitable trust on or after 1 April 2011 are to be disregarded.
20
      (2)
Sub-paragraphs (3) and (4) apply where—
(a)
a substantial donor transaction is entered into before, or on or after 1
April 2011, and
(b)
that transaction is not tainted.
      (3)
Where a payment made on or after 1 April 2011 by a charitable trust to a
25
substantial donor in the course of, or for the purposes of, the substantial
donor transaction would (in the absence of this sub-paragraph) be treated
under section 551(1) or (5) of ITA 2007 as non-charitable expenditure, that
payment is not to be so treated.
      (4)
Where, as a result of the substantial donor transaction, non-charitable
30
expenditure would (in the absence of this sub-paragraph) be treated as
incurred under section 551(2) of that Act on or after 1 April 2011, that
expenditure is not to be treated as so incurred.
      (5)
A substantial donor transaction is “tainted” if (and only if) it is reasonable to
assume from—
35
(a)
the likely effects of the relevant relievable gifts and the substantial
donor transaction, and
(b)
the circumstances in which the relevant relievable gifts were made
and the circumstances in which the substantial donor transaction
was entered into,
40

that the relevant relievable gifts (or one or more of them) would not have
been made and the transaction would not have been entered into
independently of one another.

Finance (No. 3) Bill
Schedule 3 — Tainted charity donations
Part 5 — Commencement and transitional provision
131

      (6)
In this section—
“relevant relievable gifts”, in relation to the substantial donor
transaction, means the relievable gifts by reason of which a person is
a substantial donor and the transaction is a substantial donor
transaction;
5
“relievable gift” has the meaning given by section 550 of ITA 2007;
“substantial donor” and “substantial donor transaction” have the
meaning given by section 549 of that Act.
30    (1)
For the purposes of section 502(2) of CTA 2010 (meaning of substantial
donor), relievable gifts (within the meaning of section 503 of that Act)
10
received by a charitable company on or after 1 April 2011 are to be
disregarded.
      (2)
Sub-paragraphs (3) and (4) apply where—
(a)
a substantial donor transaction is entered into before, or on or after,
1 April 2011, and
15
(b)
that transaction is not tainted.
      (3)
Where a payment made on or after 1 April 2011 by a charitable company to
a substantial donor in the course of, or for the purposes of, the substantial
donor transaction would (in the absence of this sub-paragraph) be treated
under section 504(1) or (5) of CTA 2010 as non-charitable expenditure, that
20
payment is not to be so treated.
      (4)
Where, as a result of the substantial donor transaction, non-charitable
expenditure would (in the absence of this sub-paragraph) be treated as
incurred under section 504(2) of that Act on or after 1 April 2011, that
expenditure is not to be treated as so incurred.
25
      (5)
The substantial donor transaction is “tainted” if (and only if) it is reasonable
to assume from—
(a)
the likely effects of the relevant relievable gifts and the substantial
donor transaction, and
(b)
the circumstances in which the relevant relievable gifts were made
30
and the circumstances in which the substantial donor transaction
was entered into,

that the relevant relievable gifts (or one or more of them) would not have
been made and the transaction would not have been entered into
independently of one another.
35
      (6)
In this section—
“relevant relievable gifts”, in relation to the substantial donor
transaction, means the relievable gifts by reason of which a person is
a substantial donor and the transaction is a substantial donor
transaction;
40
“relievable gift” has the meaning given by section 503 of CTA 2010;
“substantial donor” and “substantial donor transaction” have the
meaning given by section 502 of that Act.
Housing (Scotland) Act 2010 (asp 17)
31
Until such time as section 20 of the Housing (Scotland) Act 2010 is brought
45
into force, the references to that section in the following provisions are to be
read as references to section 57 of the Housing (Scotland) Act 2001 (asp 10)—

© Parliamentary copyright
Revised 31 March 2011

A-Z index

Glossary

Contact us

Freedom of Information

Jobs

Using this website

Copyright