Charities

Substantial donor regulations

An amendment to the substantial donor regulations has been announced to take effect from 23 April 2009. The current relievable gifts threshold of £100,000 in a period of six years will be increased to £150,000 in a period of six years. The annual threshold of £25,000 will remain the same. There will be further informal consultation with the Charities sector to develop new rules based around an effective anti-avoidance purpose test. The aim is to bring forward proposals at the 2009 Pre-budget report with a view to legislating in 2010.

Comment: The minor nature of the change will come as a disappointment to many in the sector who have been campaigning for wide-ranging reform of the regulations or even scrapping them entirely. It had been hoped that the six year period would be reduced to three years in order to minimize the record keeping burden, and that the annual limit of £25,000 would be increased to £50,000.

Donations to charities by individuals

Following the impending introduction of the top rate of income tax which will be increased to 50% on income over £150,000 from 2010, donations to charity by top rate taxpayers will be relievable at the top rate of 50%.

Comment: Charities may wish to use this opportunity to encourage high income donors to increase their giving so that the charity rather than the donor receives the equivalent of the additional tax benefit obtained by making charitable donations.

Charities operating in specific sectors

Some charities operating in specific areas, such as housing projects, environmental and energy-saving concerns and certain areas of social care, may be able to take advantage of various incentives announced by the Chancellor in these areas. However, details of how these incentives will be introduced have not yet been published and charities involved in such areas should watch for announcements in the next few weeks to ascertain whether these incentives will be of benefit to them.