Dividends, interest, etc: general conditions for relief 2.5

Dividends and other distributions 2.6

Interest, deeply discounted securities and unauthorised unit trusts 2.7

Annual payments and royalties 2.8

Property income 2.9

Industrial buildings 2.10

Life policies, annuities and capital redemption policies 2.11

Offshore funds 2.12

Trading income 2.13

Exemption from s.1016 ITA and Sch D Case VI income 2.14

Miscellaneous minor exemptions 2.15

Guaranteed returns on futures and options 2.16

Swaps 2.17

Dividend buying (bondwashing) 2.18

Public revenue dividends 2.19

Application for charitable purposes only 2.20

Accumulated income 2.21

Income invested in breach of trust 2.22

Tax avoidance motive 2.23

When must income be applied for charitable purposes? 2.24

Properly invested income later applied for non-charitable purposes 2.25

Which funds must be applied for charitable purposes? 2.26

Deemed income 2.27

Deduction at source 2.28

CHAPTER 3

Taxation of Charity Capital Gains

CGT relief for charity 3.1

Meaning of Acharity@ for CGT 3.2

Sale of property held by charity subject to mortgage to non-charity 3.3

Identifying the gain 3.4

When must gain be applied for charitable purposes? 3.5

Deemed gains 3.6

Section 13 TCGA 1992 3.7

Capital payment to charity from non-resident trust 3.8

Property ceasing to be subject to charitable trusts 3.9

Capital losses 3.10

Tax position if no relief applies 3.11

CHAPTER 4

Charitable Expenditure and Substantial Donor Rules

Introduction 4.1

Charitable expenditure 4.2

Non-exempt amount 4.3

Attributable/relievable income and gains 4.4

ANon charitable@ expenditure 4.5

Expenditure 4.6

Payment to a foreign body 4.7

Approved charitable investments and loans 4.8

Meaning of Aapproved charitable investments@

or Aqualifying investments@ 4.9

Type 1 4.10

Other investments: IT Type 12 4.11

Meaning of Aapproved charitable loan@ 4.12

Trading losses: charitable companies (and charitable

trusts before 2007/08) 4.13

Charitable trusts: losses from 2007/08 4.14

Timing rule 4.15

Clearance procedure 4.16

Attribution of non-exempt amount 4.17

Non charitable expenditure: the carry back rule 4.18

De minimis rule 4.19

ASubstantial Donor@ 4.20

ARelievable@ gifts 4.21

Substantial donor transactions 4.22

Exceptions to Asubstantial donor transactions@ 4.23

Operation of substantial donor provisions 4.24

Prohibited payment rule 4.25

Non-beneficial transaction rule 4.26

Position of Substantial Donor 4.27

Remuneration to substantial donor 4.28

Connected charity rule 4.29

Connected donor rule 4.30

Appeals 4.31

Transactions before 22 March 2006 4.32

Commentary 4.33

CHAPTER 5

Value Added Tax

Scope of Chapter 5.1

Fundraising event 5.2

Meaning of Aevent@ 5.3

Meaning of Acharity@ 5.4

APrimary purpose is the raising of money@ 5.5

Exclusion of exemption if more than 15 events 5.6

Exclusion of exemption where accommodation provided 5.7

Exception for competitors 5.8

Extent of exemption 5.9

Avoiding exemption 5.10

Interaction with zero rating provisions 5.11

Minimum charge and voluntary donation 5.12

No charge and a voluntary donation 5.13

VAT on admission charges 5.14

CHAPTER 6

Stamp Duties

Stamp duty land tax 6.1

Definition of charity for SDLT 6.2

The relief 6.3

First condition: land held for charitable purposes 6.4

Second condition: no tax avoidance purpose 6.5

Withdrawal of relief 6.6

Withdrawal of relief: land acquired partly for charitable purposes 6.7

Stamp duty reserve tax 6.8

Non-charitable subsidiary of charity 6.9

CHAPTER 7

Trading by Charities

Trade carried on by charity 7.1

What is a trade? 7.2

Ascertaining the profits of a charity trade 7.3

The tax exemptions for trading income: summary 7.4

Primary purpose trades 7.5

Beneficiary worker trades 7.6

Lotteries 7.7

Application for purposes of the charity 7.8

Foreign trades 7.9

Post cessation receipts 7.10

Fundraising events 7.11

Small-scale trade exemption etc 7.12

Tax Planning for non-exempt trades: summary 7.13

Minimum charge and voluntary donation 7.14

Trading losses 7.15

Converting trading income into annual payments: use

of trading trust 7.16

Franchising 7.17

Commentary 7.18

CHAPTER 8

Trading Companies Held by Charities

Use of a trading company 8.1

VAT 8.2

Calculating profits of the trading company 8.3

Extracting profits by Gift Aid 8.4

Carry-back relief 8.5

Accounting records and accounting date 8.6

Estimating the donation 8.7

Maximum permitted donation 8.8

Donation exceeding distributable profits 8.9

Furniss v Dawson 8.10

Financing the trading company by the charity 8.11

Company unable to make gift to charity without further

charity support 8.12

Commercial funding 8.13

Funding the trading company by the charity: tax implications 8.14

Return of Gift Aid payments to the company: tax aspects 8.15

Transfer pricing 8.16

CHAPTER 9

Business Sponsorship and Advertising

Introduction 9.1

When is business sponsorship a trade? 9.2

Primary purpose exemption for sponsorship income 9.3

VAT 9.4

Other points 9.5

CHAPTER 10

Corporate Charities: Special Topics

Corporate charity: group relief 10.1

Definition of close company 10.2

When is a charitable company close? 10.3

When is a subsidiary of a charity close? 10.4

Significance of charity being a close company 10.5

Charity a close investment-holding company (ACICs@) 10.6

Loan relationships 10.7

CHAPTER 11

Taxation of Employees & Beneficiaries of Charities

Taxation of volunteers 11.1

Reliefs for employees of charities 11.2

PAYE and charities 11.3

Taxation of beneficiary of charity 11.4

CHAPTER 12

Extracting Value From Companies

Scope of chapter 12.1

Extraction of profits 12.2

Loans 12.3

Pre acquisition profits 12.4

Extraction of assets from company B Liquidation 12.5

Capital asset B no liquidation 12.6

Distribution of trading stock 12.7

CHAPTER 13

Acquisition of Companies

Scope of the chapter 13.1

Charitable expenditure rules 13.2

Transactions in securities 13.3

AIncome tax advantage@ 13.4

The escape clause 13.5

The prescribed circumstances 13.6

Circumstance A 13.7

Circumstance B 13.8

Circumstance C 13.9

Circumstance D 13.10

Circumstance E 13.11

Acquisition of all capital assets B purchase and liquidation 13.12

Acquisition of part of company=s capital assets 13.13

Capital assets B extraction by dividend in specie 13.14

Extraction of capital asset B sale at book value 13 15

Asset held as trading stock 13.16

CHAPTER 14

Double Taxation Treaties & Charities

Introduction 14.1

Charities as Aresidents@ of a contracting state 14.2

Charity as beneficial owner 14.3

OECD Model exemptions 14.4

The UKBFrench treaty 14.5

The UKBGerman treaty 14.6

The UKBUSA treaty 14.7

Dual qualified charity 14.8

CHAPTER 15

Cash Gifts From Individual to Charity (Gift Aid)

History of IT reliefs for cash gifts to charity 15.1

Gift Ato a charity@ 15.2

Qualifying donation 15.3

Payment (Condition A) 15.4

AA sum of money@ 15.5

Gift by will 15.6

Loans to charity 15.7

Release of debt owed to individual by charity 15.8

Charity pays sum to donor: circular payments 15.9

Voluntary workers= expenses 15.10

No-repayment rule (Condition B) 15.11

AGift@ 15.12

Benefit rule (Condition F) 15.13

Meaning of Abenefit@ 15.14

Acknowledgements 15.15

Benefit Ain consequence@ of the gift 15.16

Contract to provide benefit 15.17

No contract to provide benefit 15.18

Gifts from parents to schools 15.19

Gift to support charity workers 15.20

Adventure fundraising events 15.21

Membership subscriptions 15.22

Benefit received by connected person 15.23

Split payments for gift with benefit 15.24

Small benefits 15.25

Valuation of benefits 15.26

Charity auctions 15.27

Planning for benefits of uncertain value 15.28

Annualisation 15.29

Right of admission 15.30

Goods sold by charity as agent 15.31

Acquisition of property by charity (Condition E) 15.32

Non resident donor (Condition G) 15.33

The minimum and maximum amount 15.34

Interaction of Gift Aid and VAT 15.35

Operation of Gift Aid relief 15.36

Donor paying insufficient tax 15.37

Worked HMRC computations 15.38

Gift by foreign domiciled individual 15.39

Position of recipient charity 15.40

Payment to charity to pass on to another charity 15.41

Operation of Gift Aid relief: commentary 15.42

Payment deductible in computing income 15.43

Carry back of donor=s higher rate relief 15.44

Giving through the self-assessment return 15.45

Deposited donations (carry forward of relief) 15.46

Gift Aid declaration 15.47

Gift from joint bank account 15.48

Sponsored events 15.49

Interaction with payroll deduction scheme (Condition C) 15.50

Record keeping and evidence of payment 15.51

Using envelopes to collect cash donations 15.52

Procedure for reclaiming tax 15.53

CHAPTER 16

Payroll Deduction Scheme

History 16.1

Operation of payroll deduction scheme 16.2

The agency 16.3

Conditions for relief 16.4

Benefit for donors 16.5

Interaction with other income tax reliefs 16.6

Employer=s administrative expenses 16.7

Comparison with Gift Aid 16.8

CHAPTER 17

Interest-Free Loans to Charities

Introduction 17.1

IT settlement provisions 17.2

Transactions associated with loans or credit 17.3

Capital gains tax liability of lender? 17.4

Inheritance tax position of lender 17.5

Position of charity 17.6

CHAPTER 18

Cash Donations From Companies to Charity

Terminology 18.1

Gifts to charity: company law issues 18.2

Relief for charges on income 18.3

Payments deductible in computing profits 18.4

Qualifying donation 18.5

Charitable company donor 18.6

Distributions 18.7

Records 18.8

Position of recipient charity 18.9

CHAPTER 19

Giving by Businesses to Charity

Introduction 19.1

Gift to charity: deductible trading expense 19.2

Interaction of trading deduction relief and Gift Aid 19.3

Simple gifts v Gift Aid 19.4

Gift Aid from partnerships 19.5

Gift of services to charity 19.6

Secondment of employees 19.7

Gift of trading stock, plant and machinery 19.8

Lease to charity at undervalue 19.9

Gift of goods and services: VAT 19.10

Payroll deduction scheme 19.11

Sponsorship/advertising 19.12

CHAPTER 20

Income Tax Relief for Gift of Shares, Securities and Land to Charity

Introduction 20.1

Property law issues 20.2

The conditions for relief 20.3

The whole of the beneficial interest 20.4

Meaning of Aqualifying investments@ 20.5

Further provisions for gift of land 20.6

Anti-avoidance for gifts of land: Adisqualifying events@ 20.7

Land in joint ownership 20.8

Amount of relief 20.9

Benefits deducted from the Arelievable@ or Arelevant@ amount 20.10

Incidental costs of making disposal 20.11

Net benefit to charity 20.12

Valuation 20.13

Disposal-related liabilities 20.14

QIDR position of donor 20.15

CGT relief for donor 20.16

QIDR: position of the charity 20.17

Gift of investments v. gift of cash of same value 20.18

Gift of investments v. sale of investments and gift out of proceeds 20.19

ASharegift@ services for uneconomic shareholdings 20.20

IT relief for gift of non-qualifying assets to charity via QIDR 20.21

QIDR solution to St Dunstan=s v Major 20.22

Record keeping 20.23

Commentary: Extension of QIDR to other assets 20.24

CHAPTER 21

Capital Gains Tax Reliefs on Disposals to Charity

Introduction 21.1

CGT charity relief 21.2

Meaning of Acharity@ 21.3

CGT charity relief: position of donor 21.4

Meaning of Aconsideration@ 21.5

CGT charity relief: position of the charity 21.6

Transfer from company in liquidation to charity 21.7

Disposal of qualifying corporate bond to charity 21.8

Planning: selection of assets 21.9

Gift followed by sale by charity 21.10

Gift of assets v. sale & gift of cash 21.11

Assets with inherent losses 21.12

Disposal from non-charitable trust to charity 21.13

CHAPTER 22

Inheritance Tax Reliefs on Transfers to Charity

Introduction 22.1

Promise to make transfer to charity 22.2

Dispositions allowable for income tax 22.3

Normal expenditure out of income 22.4

Brief history of IHT charity exemption 22.5

The IHT charity exemption 22.6

Meaning of Acharity@ 22.7

Foreign charities 22.8

Selection trusts 22.9

Date for determining charitable status 22.10

AGiven to charities@ 22.11

Anti avoidance provisions: introduction 22.12

Application for charitable purposes rule 22.13

Postponed gift rule 22.14

Conditional gift rule 22.15

How to make a conditional gift to charity 22.16

Defeasible gift rule 22.17

Limited period rule 22.18

Retained interest rule (land) 22.19

Retained interest rule (non-land) 22.20

Entire interest rule 22.21

Gift to charity with gift over to another charity 22.22

Acquisition of reversionary interest or Asettlement power@

from a charity 22.23

IHT charity exemption on termination of interest in possession 22.24

Gift of interest in possession to a charity 22.25

Purchase of equitable interest by a charity 22.26

Meaning of Aacquired for consideration@ 22.27

Acquisition for consideration: transitional rules 22.28

Loans and use of property 22.29

Providing a home for dependant for life, remainder to charity 22.30

Providing fund for dependant for life, remainder to charity 22.31

Gift with reservation of benefit(AGWR@) 22.32

Charity transfers asset to disappointed beneficiary under

moral obligation 22.33

IHT charity relief on transfer of value by close company 22.34

Deferred shares 22.35

Inheritance tax on charities and their members 22.36

CHAPTER 23

Will Drafting

Obtaining IT and IHT relief on gifts by will 23.1

Residue to charity with provision for surviving spouse 23.2

Residue to charity with provision for surviving relative or

dependant 23.3

Estate including agricultural property or business property 23.4

Specific gifts of business property 23.5

Property subject to foreign IHT 23.6

Pecuniary legacy out of part business estate 23.7

Residuary gift to charity out of part business estate 23.8

Pecuniary legacy to charity out of part business estates: the solution 23.9

Pecuniary legacies to avoid fragmentation of business assets 23.10

Interaction of excluded property rules and charity exemption 23.11

Cost of administration 23.12

CHAPTER 24

Charitable Gift of Share Residue: Benham Issues

The problem 24.1

An impermissible form 24.2

Terminology: gross v. net division 24.3

An express grossing up clause 24.4

Is an express grossing up clause wise? 24.5

The common form 24.6

Analysis of common form 24.7

Case law 24.8

What should executors and charities do? 24.9

The HMRC view 24.10

Moral for the will drafter 24.11

CHAPTER 25

Obtaining IT and IHT Reliefs on Gifts by Will or IoV

Obtaining IT and IHT reliefs on gift by IoV 25.1

Arrangements using Gift Aid 25.2

QIDR 25.3

Obtaining IT and IHT reliefs on gifts by Will 25.4

Gift of a non-cash asset to charity by Will 25.5

Importance of correct Will drafting 25.6

CHAPTER 26

Variation of Wills

Introduction 26.1

Meaning of Avaried@ 26.2

Variation of absolute gifts in favour of charity 26.3

Variation of life interest in favour of charity 26.4

IoV after expiry of life interest, remainder not to charity 26.5

Variation after death of life tenant: conclusion 26.6

IoV when gift made to foreign charity 26.7

Obtaining IT relief on gift by IoV 26.8

Capital gains tax and IoV 26.9

CHAPTER 27

Benefits for Donors

Scope of chapter 27.1

To gift or not to gift? 27.2

Sale of asset for periodic payments 27.3

Sale of asset for instalments of capital 27.4

Gift of home subject to right of residence 27.5

Provision for relatives and dependants: lifetime inheritance

tax planning 27.6

CHAPTER 28

Trusts with Some Charitable Element

Types of trust 28.1

Partly charitable trusts: IHT 28.2

Partly charitable trusts: income tax and CGT 28.3

Temporary charitable trust: IHT 28.4

Temporary charitable trust: income tax and CGT 28.5

Mixed charitable trusts 28.6

Settlor-interested trust 28.7

Trust income paid to minor children of settlor 28.8

CGT planning for sale of trust asset to charity 28.9

CHAPTER 29

Payments to Charity From Non-resident Trusts

Payment to charity from non resident trust 29.1

ACapital payment@ 29.2

Is a charitable company a Abeneficiary@ within s.87? 29.3

Is a charitable trust Aa beneficiary@ within s.87? 29.4

Does the charity exemption offer a defence to s.87? 29.5

Defence for foreign domiciled charities 29.6

Does a capital payment to charity reduce Atrust gains@ of the

non-resident trust? 29.7

Schedule 4C gains 29.8

Does a capital payment fall within section 631 ITA 29.9

CHAPTER 30

Estates of Deceased Persons

Introduction 30.1

Charity as pecuniary legatee 30.2

Income tax 30.3

Capital gains tax 30.4

Gift of specific legacy to charity 30.5

Gifts of residue to charity 30.6

Charity residuary legatee: income tax 30.7

Charge on UK Aestate income@ 30.8

CGT and IoVs 30.9

Claims against charities 30.10

Claims under the Inheritance (Provision for Family and

Dependants) Act 1975 30.11

Claim against charity: will of disputed validity 30.12

Claim against estate: proprietary estoppel 30.13

CGT allowable loss 30.14