Charities that do not claim gift aid but do claim other UK charity tax reliefs and exemptions administered by HMRC will be affected by its new definition of a charity from April, the government department has announced.
From 1 April 2012 onwards, the Finance Act 2010, Schedule 6, Part 1 (Further Consequential and Incidental Provision Etc) Order 2012/735 and the Finance Act 2010, Schedule 6, Part 2 (Commencement) Order 2012. S.I.2012/736 will apply the new definition of a charity under Schedule 6 of Finance Act 2010, to all UK charity tax reliefs and exemptions administered by HMRC not already covered by the definition.
The date from which the new definition applies depends on the specific relief or exemption, but all charities that do not claim gift aid but claim other UK charity tax reliefs and exemptions administered by HMRC are affected by the new definition (charities that claim gift aid have been required to meet the new definition since 1 April 2010).
In order to continue to be eligible for the charity tax reliefs and exemptions, charities must:
- Be charities under the law of England and Wales (or would be, if they were established in England and Wales).
- Be located in the UK or an EU member state, Iceland or Norway.
- Be registered by the Charity Commission where the law requires, or be registered by a regulator equivalent to the Charity Commission in their home country if the law of the home country requires.
- Meet the ‘management condition’; broadly the people involved with the charity’s finances must be ‘fit and proper persons’. More information on the fit and proper persons test can be found in the HMRC guide Applying to HMRC for recognition as a charity for tax purposes.
HMRC says that in most cases charities will not need to do anything further because they will already have procedures in place to ensure that personnel are fit and proper, but does advise organisations to read its guidance on the matter if they have not already done so.
On 24 February, HMRC issued updated guidance about its new wording with regards to gift aid declarations, and how charities should aim to comply with the changes by 31 December 2012. It has now offered additional help on its website.
