01 June 2011

Budget benefits for charities

The Chancellor’s recent Budget contained a number of changes aimed at benefiting charities, as they prepare to shoulder part of the burdens created by David Cameron’s ‘Big Society’.

The changes include:

  • An increase in the Gift Aid benefit limit from £500 to £2,500 per charity. This is the limit on the value of items or services that charities can provide to a donor (or someone connected to him) in return for a donation (although the value must still be less than 5 per cent of the donation). This change is due in this tax year.
  • If someone leaves 10 per cent or more of their estate to charity in their Will, the Inheritance Tax (IHT) rate payable on their estate (if any) when they die will reduce from 40 per cent to 36 per cent, and the donation itself will continue to be free of IHT. This change is to apply where the death occurs on or after 6 April 2012.
  • Charities can claim a repayment akin to Gift Aid on donations of £10 or less without having to obtain a declaration from the donor, provided the total amount of such donations in a year do not exceed £5,000. They will have to meet certain conditions, and the change is due from April 2013.
  • Charities will be able to use a new online filing system for registering their details for gift aid and making gift aid claims. This change is due in 2012-13.

Recommendation

Charities can now start promotional plans to encourage small charitable donations, and charitable giving of more than 10 per cent on death.

For more information on this topic, contact Jennifer Chambers on 0113 297 8945 or at jchambers@shulmans.co.uk.