Small Charitable Donations Act 2012

JurisdictionEngland & Wales
Citation2012 c. 23


Small Charitable Donations Act 2012

2012 CHAPTER 23

An Act to provide for the making of payments to certain charities and clubs in respect of certain gifts made to them by individuals; and for connected purposes.

[19th December 2012]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-

Top-up payments

Top-up payments

S-1 Top-up payments in respect of small donations made to eligible charities

1 Top-up payments in respect of small donations made to eligible charities

(1) A charity is entitled to a payment from HMRC (a "top-up payment") if-

(a) the charity is an eligible charity for a tax year,

(b) the charity has made a successful gift aid exemption claim in respect of gifts made to it in the tax year,

(c) small donations are made to the charity in the tax year, and

(d) the charity makes a claim in respect of small donations made to it in the tax year.

(2) The amount of the top-up payment is-

SD x (R/(100-R))

where-

SD is the amount of the small donations to which the claim relates, and

R is the percentage rate of the basic rate of income tax for the tax year in question.

(3) A charity is not entitled to top-up payments in respect of small donations made to it in a tax year in excess of the maximum donations limit for the charity for the tax year.

(4) The "maximum donations limit" for a charity for a tax year is-

(a) an amount equal to 10 times the gift aid donations amount for the charity for the tax year, or

(b) if less, the specified amount for the charity for the tax year.

(5) The "gift aid donations amount" for a charity for a tax year is the amount of the gifts made to the charity in the tax year and in respect of which it has made successful gift aid exemption claims.

(6) The "specified amount" for a charity for a tax year is £5,000.

(7) This section is subject to sections 4, 6 and 9 (connected charities and charities running charitable activities in community buildings).

S-2 Meaning of "eligible charity"

2 Meaning of "eligible charity"

(1) A charity is an eligible charity for a tax year if-

(a) it has made a successful gift aid exemption claim in at least 2 of the previous 4 tax years, and

(b) the charity's start-up period expired before that year.

(2) If a charity did not make any successful gift aid exemption claims in a period of 2 consecutive tax years, any claim made in an earlier tax year is to be disregarded for the purposes of subsection (1)(a).

(3) A charity on which a penalty has been imposed in connection with a gift aid exemption claim or top-up claim made by the charity is not an eligible charity-

(a) for the tax year in which the claim was made, or

(b) for the next tax year,

(even if the penalty was imposed after the tax year in which the claim was made).

(4) For the purposes of this section-

(a) a charity's "start-up period" is the first period of 2 consecutive tax years during which it is, at all times, a charity (as defined by section 18(1));

(b) "penalty" means a penalty under-

(i) Schedule 24 to the Finance Act 2007, or

(ii) regulations under section 11;

(c) a penalty is not to be regarded as having been imposed if all of the penalty is suspended (or the decision that a penalty is payable is cancelled on appeal); but this does not apply to a suspended penalty that subsequently becomes payable.

S-3 Meaning of "small donation"

3 Meaning of "small donation"

(1) In this Act "small donation" means a gift made to a charity by an individual in relation to which each of the conditions in the Schedule is met (but does not include a membership fee).

(2) But if a small donation made to a charity is applied to purposes other than charitable purposes, or any part of the donation is applied to purposes other than charitable purposes, the donation or part is to be treated as if it were not a small donation.

(3) Subsection (2) does not apply to-

(a) the Trustees of the National Heritage Memorial Fund;

(b) the Historic Buildings and Monuments Commission for England;

(c) the Trustees of the British Museum;

(d) the Trustees of the Natural History Museum.

Connected charities and community buildings

Connected charities and community buildings

S-4 Connected charities

4 Connected charities

(1) This section applies if two or more charities-

(a) are connected with one another in a tax year, and

(b) are eligible charities for the tax year.

(2) Section 1 applies to each of the charities in relation to the tax year as if references to small donations made to a charity included small donations made to any of the charities.

(3) The specified amount for the purposes of section 1(4) for each of the charities for the tax year is an amount equal to-

(a) £5,000, divided by

(b) the number of the charities which make a top-up claim in respect of small donations mad e in the tax year.

(4) This section does not apply if any of the charities runs charitable activities in a community building in the tax year (as to which see section 9).

S-5 Meaning of "connected"

5 Meaning of "connected"

(1) For the purposes of this Act a charity is connected with another charity in a tax year if it is connected with that other charity at any time in the tax year (as to which see subsections (3) to (7)).

(2) If-

(a) a charity ("charity A") is connected with another charity ("charity B") (including by virtue of this subsection) in a tax year, and

(b) charity B is connected with a further charity ("charity C") in the tax year,

charity A and charity C are also connected with each other in the tax year for the purposes of this Act.

(3) Section 993 of the Income Tax Act 2007 applies for determining whether a charity is connected with another charity at any time for the purposes of this section.

(4) In the application of section 993 for the purposes of subsection (3)-

(a) a charity that is a trust is to be treated as if it were a company (and accordingly a person), including in this subsection;

(b) a charity that is a trust has "control" of another person if the trustees (in their capacity as trustees of the trust) have, or any of them has, control of the person;

(c) a person (other than a charity regulator) has "control" of a charity that is a trust if-

(i) the person is a trustee of the charity and some or all of the powers of the trustees of the charity could be exercised by the person acting alone or by the person acting together with any other persons who are trustees of the charity and who are connected with the person,

(ii) the person, alone or together with other persons, has power to appoint or remove a trustee of the charity, or

(iii) the person, alone or together with other persons, has any power of approval or direction in relation to the carrying out by the trustees of any of their functions.

(5) A charity that is a trust is also to be regarded as connected with another charity that is a trust at a time for the purposes of this section if, at that time, at least half of the trustees of one of the charities are-

(a) trustees of the other charity,

(b) persons who are connected with persons who are trustees of the other charity, or

(c) a combination of both.

(6) In determining whether a person is connected with another person for the purposes of subsection (4)(c)(i) or (5)(b), apply section 993 of the Income Tax Act 2007, with the omission of subsection (3) of that section (and without the modifications in subsection (4) above).

(7) But a charity is not to be regarded as connected with another charity at a time for the purposes of subsection (1) unless, at that time, the purposes and activities of the charities are the same or substantially similar.

(8) The Treasury may by order amend this Act so as to change the circumstances in which a charity is connected with another charity in a tax year for the purposes of the Act.

S-6 Charities running charitable activities in community buildings

6 Charities running charitable activities in community buildings

(1) This section determines the specified amount for the purposes of section 1(4) for a charity that runs charitable activities in one or more community buildings in a tax year (see sections 7 and 8 for the meaning of certain terms used in this section).

(2) The specified amount for the charity for the tax year is an amount equal to-

(a) the sum of the amounts which, for each community building in which the charitable activities are run, is the community building amount, plus

(b) the remaining amount.

(3) The "community building amount", in relation to a community building, means-

(a) the sum of the small donations that are made to the charity in the community building in the tax year by group members while it is running charitable activities in the building, or

(b) if less, £5,000.

(4) The "remaining amount" means-

(a) the sum of the remaining donations made to the charity in the tax year, or

(b) if less, £5,000.

(5) "Remaining donations", in relation to a charity and a tax year, means the small donations made to the charity in the tax year other than any made to it in community buildings in the tax year by group members while it is running charitable activities in the...

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