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Key Updates from the 2012 Finance Bill: Tax Reliefs and Charitable Contributions

The Finance Bill 2012 introduced significant amendments, such as a cap on income tax relief for donations exceeding £50,000 or 25% of an individual's income, and offered reduced inheritance tax rates for estates donating 10% to charity. Gift Aid Small Donations Scheme (GASDS) enhancements, including increased maximum donation amounts and eased repayment processes, were also highlighted. VAT changes, particularly regarding listed buildings, and rulings from the Court of Appeal affecting charitable status were essential updates for charities and donors alike.

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Key Updates from the 2012 Finance Bill: Tax Reliefs and Charitable Contributions

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  1. Legislation & Case Law Update Gail HallOctober 2012

  2. Finance Bill 2012 • Income tax: cap on relief if more than £50,000 or 25% of income lifted after protest. (31.5.2012) • Inheritance tax: reduced rate if 10% of net estate going to charity; (post 6.4.2012 deaths)

  3. Gift Aid Small Donations Scheme (GASDS) • Gift aid style repayment (capped at £5,000pa) on small donations without GA declarations from donors. 2011.

  4. GASDS cont. • Max donation increased from £10 to £20 in 2012 Budget; • Bill in 2013; • Complex – HMRC registered for GA; submitted GA claim in 3 out of 7 years with no more than 2 year gap; limit on claims with GA claims.

  5. VAT – ouch! • Removal of zero rating of approved alterations to listed buildings; transitional arrangements to protect contracts pre 21.3.2012.

  6. Cultural Gifts Scheme • Reduction of income tax & CGT for making gifts of pre-eminent objects/works of art to the nation.

  7. More VAT – EU cost sharing exemption • For certain services supplied within CSGs where the members carry out exempt or non business activities; • Help to charities, education providers, social housing providers, health & welfare organisations.

  8. Helena Partnerships • Not able to claim £6m corporation tax relief on rents as purposes NOT exclusively charitable. • Court of Appeal dismissed appeal; operations NOT for primary benefit of the community.

  9. Young and another v HM AG[2011] EWHC 3782 (Ch) • Pension issue. Collection has to be sold to plug pension hole.

  10. Berry & Anthr v IBS-STL (UK) • Gift of residuary estate to 6 named charities; 1 charity’s assets transferred to corporate successor charity which then went into insolvent liquidation. • Will seen as giving execs unfettered discretion to distribute share of estate

  11. Phillips v RSPB [2012] EXHC 618 618 (Ch) • Gift in will to named charitable company effective at date of testatrix’s death.

  12. Aliss & another v CC and others • CC scheme to merge 2 independent schools: controversial; cy pres applied. • Disgruntled parents appealed against the scheme; • Tribunal held that the scheme created unnecessary risk re the charitable property. Mergers can be unpicked…

  13. Uturn UK CIC v CC • All of an organisation’s purposes MUST be EXCLUSIVELY charitable for it to be a charity. • 1 of the objects was to advance citizenship & community development via street associations.

  14. Wirral Independent Recycling Enterprise Ltd V HMRC • Not for profit furniture recycling business was not established for exclusively charitable purposes so not entitled to claim VAT zero-rating on sale of donated goods. • Get registered with the CC if you want to embark on significant taxable activities.

  15. Contact • Gail Hall 01622 698045 gailhall@whitehead-monckton.co.uk

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