Annex 1: Minor changes in the law made by the Act: Change 21: Contributions to local enterprise organisations or urban regeneration companies: gifts of trading stock: charge any benefit by reference to periods of account: sections 82 and 109
This change deals with a benefit that arises to a trader in connection with:
	a contribution to a local enterprise organisation or urban regeneration company; or
	a gift of trading stock.
The benefit is charged to tax by treating the benefit as a trade receipt in the period in which it is received.
Sections 79(9), 79A(4), 79B(4) and 84A(4) of ICTA charge the benefit for the “chargeable period” in which it is received. For a person chargeable to income tax, this period is a year of assessment. If the benefit is received on a date in a tax year that is later than the accounting date, it is taxed in the same tax year as the profits of the period of account ended on that accounting date. This produces practical problems. It is in any event illogical to charge trading receipts to tax by reference to a tax year rather than a period of account.
This change will not alter the amount charged to tax. The most it will do is affect the timing of that tax liability. In a small minority of cases this could mean a different rate of tax being applied, according to individual circumstances. Any overall tax effect is likely to be negligible.