Commentary

B5.805 Legal definitions of a charity for tax purposes

Business tax
Business tax | Commentary

B5.805 Legal definitions of a charity for tax purposes

Business tax | Commentary

The legal meaning of charity

B5.805 Legal definitions of a charity for tax purposes

Definition of a charity for tax purposes—FA 2010 definition

FA 2010 introduced a new definition for tax purposes of charities and other organisations entitled to UK charity tax reliefs. This new definition did not apply in most cases until commencement orders were made1, but it did apply from 6 April 2010 to donations by individuals under Gift Aid (see E1.811). The commencement orders came into force on 1 April 2012 for the purposes of inheritance tax and corporation tax, and on 6 April 2012 for the purposes of income tax and capital gains tax.

Meaning of 'charity'

Under the FA 2010 provisions, in order to qualify as a charity it is necessary to meet the following conditions:

  1.  

    •     the charity must be established for charitable purposes only. This is the same meaning as for charities in England and Wales as set out in Charities Act 2011, s 2 (see below), extended to cover charities wherever established2

  2.  

    •     the charity must meet a jurisdiction condition and be within the authority of a UK court, being the High Court, the Court of Session, the High Court in Northern Ireland or any other court of a corresponding jurisdiction under the law of another Member State of the EU, or a territory to be specified in regulations3. Norway and Iceland have been so specified with effect from 20 August 2010, and Liechtenstein from 31 July 20144

  3.  

    •     the charity must comply

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