Gifts of cash to charity

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Gifts of cash to charity
  • Meaning of ‘charity’
  • Gift aid
  • Income tax relief
  • Charity’s position
  • Payroll giving
  • Retail gift aid scheme

Individuals receive income tax relief on donations they make to charities. There are three ways in which an individual can obtain income tax relief on cash donations to charity: by gift aid (also known as gift aid relief), by direct deduction from salary under payroll giving and by the retail gift aid scheme.

For details of income tax relief available for non-cash donations, see the Gifts of quoted shares and land to charity guidance note.

Note that donations to charity are not included in the cap on unlimited income tax reliefs. See the Cap on unlimited income tax reliefs guidance note for more information.

Meaning of ‘charity’
Donations from 6 April 2010

The definition of charity was significantly altered by FA 2010, extending UK income tax reliefs to charities based overseas in ‘relevant territories’ (ie countries in the European Economic Area). The EEA is comprised of the EU Member States plus Norway, Iceland and Liechtenstein.

The post-5 April 2010 definition of a charity is a body of persons or a trust which:

  • is established for a charitable purpose only
  • meets the jurisdictional condition (ie under the jurisdiction of the UK courts or the courts in a relevant territory)
  • meets the registration condition (ie has complied with any requirement to be included in the register of charities kept under Charities Act 2011, s 30 (subscription sensitive) or with a similar requirement to be included in an equivalent register in a relevant territory)
  • meets the management condition (ie the management is made up of fit and proper persons)

FA 2010, Sch 6, paras 1–7, 33–34

For charities established in England and Wales, charitable purposes is defined in Charities Act 2011, ss 2–3 (subscription sensitive).

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