New definition of a charity to affect charity tax reliefs

Charities that do not claim gift aid, but do claim other UK charity tax reliefs and exemptions administered by HM Revenue and Customs (HMRC) will be affected by its new definition of a charity from the beginning of April. From 1 April 2012 onwards, the Finance Act 2010, Schedule 6, Part 1 (Further Consequential and Incidental Provision Etc) Order 2012/735 and the Finance Act 2010, Schedule 6, Part 2 (Commencement) Order 2012. S.I.2012/736 will apply the new definition of a charity under Schedule 6 of Finance Act 2010, to all UK charity tax reliefs and exemptions administered by HMRC not already covered by the definition. The date from which the new definition applies depends on the specific relief or exemption, but all charities that do not claim gift aid but claim other charity tax reliefs and exemptions administered by HMRC are affected by the new definition. charities that claim gift aid have been required to meet the new definition since 1 April 2010. In order to continue to be eligible for the charity tax reliefs and exemptions, charities must:

  • Be charities under the law of England and Wales
  • Be located in the UK
  • Be registered by the Charity Commission where the law requires
  • Meet the management condition that people involved with the charity's finances must be fit and proper persons.

On 24 February HMRC issued updated guidance about the new wording regarding gift aid declarations and how charities should aim to comply with the changes by 31 December 2012. Additional advice is now available on its website at www.hmrc.gov.uk/news/new-guid-giftaid.htm.