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TaxationWeb by Laura Hutchinson ATT ATII

The Art of Giving Tax-Efficiently - Laura Hutchinson, an Associate at Forbes Dawson explains the new incentives of charitable giving and discusses the reliefs available on donations to qualifying sports clubs.New rules affecting donations to charities were announced in the 2002 budget.

1. The Self Assessment Return will include an advert on how a donation to charity can be made. It is not clear from the information available at this stage how this will practically assist in the process of making a donation.

2. It is now also possible to direct any repayment of tax due to an individual to a charity, simply by nominating the charity. It is expected that this nomination will be made on the repayment claim form itself.

3. The final change allows higher rate relief obtained on any charitable donation to be carried back to the previous year.

The first two changes are a means of simplifying the ways to make donations and attempt to increase the awareness of charitable giving.

The latter is a useful tax relief making charitable gifting more flexible.

Gift of Land and Buildings to Charities

The government have also extended the availability of income tax and corporation tax relief from that available on gifts of shares and other assets to charities, to include relief on gifts of land and buildings.

The amount of relief available will be the market value of the shares less any consideration or benefits received by the donor. This amount will be deducted from the total income of the donor allowing full income or corporation tax relief on the value gifted.

This relief applies on land and buildings gifted by individuals from 6 April 2002, and from 6 April 2001 for companies.

Sports Club

The Budget introduced new reliefs for sport clubs meeting certain criteria. This relief attempts to encourage support of sports clubs through donations.

The reliefs available for individuals making donations are available under the Gift Aid scheme. The sports club does not have to be of charitable status for the individual to qualify for this relief, but the Charity Commission has revised its guidelines allowing sports clubs to apply for charitable status.

Therefore the same reliefs are available whether the hotel is of charitable status or not. The only conditions that need to be satisfied are:

• The club is open to the whole community;
• Organised on a amateur basis; and
• Provides facilities for, and promoting participation in, one or more eligible sports.

This will include sports halls used by schools and individuals etc, but will not include such organisations as private golf clubs or fitness centres, which only admit prepaid members and not the general community.

Relief for Individuals Giving to Sports Clubs

An individual making a donation to a sports club qualifying as a community amateur sports club, will be entitled to the following reliefs:

• Gift Aid
• Inheritance Tax relief on the amount gifted

It is also possible for individuals and businesses to make a gift of assets without incurring any capital gains tax.

Businesses may also wish to gift trading stock, and plant and machinery to obtain trading relief, if the clubs are willing to accept the assets.

Not only does the individual making the gift obtain tax relief, but also the club itself attracts a number of reliefs. Full corporation tax relief is available to the club on:

• Interest received
• Trading income up to £15,000
• Income from property up to £10,000
• Chargeable gains on the sale of assets

Further Information

For further information please contact Laura Hutchinson on 0161 245 1098 or by email on laura@forbesdawson.co.uk.