Introduction Payroll giving
2.Paragraph 1 amends the provisions in relation to payroll giving. A new charge to tax will be applied to income received by charitable trusts and charitable companies on donations received through the Payroll Giving scheme (Part 12 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) (payroll giving)), in line with the charge on charities on donations received through other means.
3.Sub-paragraph (1) provides for the insertion into the Income Tax Act 2007 (ITA) of new section 521A (Gifts under payroll deduction schemes: income tax liability and exemption).
4.New section 521A(1) of ITA provides that new section 521A applies to charitable trusts that receive donation income through the payroll giving scheme.
5.Subsection (2) introduces a new charge to income tax on donation income received by charitable trusts through the payroll giving scheme.
6.Subsection (3) confirms that the charge to income tax applies to the total amount of donations received under subsection (1) during the tax year (from 6 April in a calendar year to 5 April of the following calendar year).
7.Subsection (4) provides that, where donation income that is brought into charge under subsection (2) is applied for charitable purposes only, it is to be excluded from the calculation of total income, for the purposes of applying the new income tax charge.
8.Subsection (5) provides that the trustees of the charitable trust are liable for any tax that arises under the new charge.
9.Sub-paragraph (2) provides for the insertion into the Corporation Tax Act 2010 (CTA) of new section 472A (Gifts under payroll deduction schemes: corporation tax liability and exemption).
10.New section 472A(1) of CTA provides that the new section applies to charitable companies that receive donations from individuals through the payroll giving scheme, and treats these donations as income subject to corporation tax.
11.Subsection (2) provides that, where donation income that is brought into charge under subsection (1) is applied for charitable purposes only, it is to be excluded from the calculation of total income, for the purposes of applying the new corporation tax charge.
12.Subsection (3) requires that a charitable company must make a claim for exemption under subsection (2).