Commentary on Sections Overview Overview Section 426: Election by donor: gift treated as made in previous tax year
1207.This section provides that an individual may elect that a qualifying donation made in one tax year be treated as having been made in the preceding tax year (“year P”). It is based on section 98 of FA 2002.
1208.A test similar to that in section 422 must be met in year P for an election to be valid. Because of the possibility that other qualifying donations will have been made in year P, and will not themselves have been carried back to “year P minus 1”, the language in which the test is expressed differs slightly from that in section 422. Hence the references to the “increased total of gifts”.
1209.Subsection (4), concerning the increased total of gifts, also has to take into account the possibility that elections are made when a notice under section 8 of TMA has not been issued and there is no other legal duty to notify liability to tax or file a self-assessment return. In that case, instead of being included in the self-assessment return under section 42(2) of TMA, elections may be made otherwise (under Schedule 1A to TMA), which opens up the possibility of a number of elections being made in respect of separate donations in the same year.
1210.In the case of non-residents to whom section 422 applies, if a donation does not meet the test set out in section 422(3) in the tax year in which the gift is made, it cannot be carried back in this way. In such a case the donation would not be “qualifying” and so would fail the condition in subsection (1)(a) of this section.
1211.An election must be made before the actual filing date of the self-assessment tax return for year P (if a self-assessment return is made for that year), and in any case before the normal self-assessment filing date for year P. The requirement in section 98(2) of FA 2002 that the election “be made by notice in writing to an officer of the Inland Revenue” is catered for by paragraph 2(1) of Schedule 1A to TMA.
1212.In all cases the charity is treated as receiving the donation, not in year P, but in the tax year of payment. It is in respect of the year of payment that the charity will, if appropriate, be entitled to an income tax repayment in respect of the donation.