Annex 1: Minor changes in the law Change 31: Charitable companies: gifts to eligible bodies under SA Donate: claims: section 475
Under this change an eligible body is not required to claim exemption from tax if it receives a qualifying gift as a result of a direction under section 429(2) of ITA (the “SA Donate” scheme).
Section 25(10) of FA 1990 treats a gift, which is both a qualifying donation for gift aid under Chapter 2 of Part 8 of ITA and paid to a charitable company, as the receipt, under deduction of income tax, of an annual payment of an amount equal to the grossed up amount of the gift. “Charitable company” is defined in section 25(12)(a) of FA 1990 to include not only companies established for charitable purposes but also bodies within section 507 of ICTA.
Section 505(1)(c)(iizb) of ICTA exempts annual payments and therefore qualifying donations received by a charitable company so far as they are applied for charitable purposes. Section 505 contains a general requirement for a claim for all the exemptions mentioned in the section. However section 83(4) of FA 2004 overrides this in one particular respect. It treats a charitable company as having made a claim to any exemption to which it is entitled under section 505(1)(c)(iizb) of ICTA in respect of qualifying donations which are received as a result of a direction under SA Donate by virtue of section 429(2) of ITA. (SA Donate allows an individual to give repayments of tax due under self-assessment to a charity of choice.)
Section 507 of ICTA gives eligible bodies, on receipt of a claim, the same exemption as charitable companies which apply the whole of their income to charitable purposes. But section 83(4) of FA 2004 does not include eligible bodies within its definition of charitable companies, leaving such bodies with the need to claim for relief on qualifying donations received as a result of a direction under section 429(2) ITA.
This change gives eligible bodies exemption if qualifying donations are received as a result of a direction under section 429(2) ITA without the need to make a claim, thus putting them on the same footing as charitable companies.
This change is reflected in the sections as follows.
Section 472 rewrites the exemptions for qualifying donations paid to charitable companies in section 505(1) of ICTA and section 25(10) and (12) of FA 1990. Subsection (5) rewrites section 83(4) of FA 2004 which exempts charities receiving qualifying donations under SA donate from the need to make a claim. Section 475 is the equivalent for eligible bodies of section 472, and subsection (7) exempts these bodies from making claims if qualifying donations are received under SA Donate, in the same way as section 472(5) does for charitable companies.
This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle but not in practice) only administrative matters.