OTHER CHAPTERS
I. SETTING UP AN ORGANISATION
Ch.1: Trusts & unincorporated associations
Ch.2: Companies & other incorporated structures
Ch.3: Charitable status, charity law & regulation
Ch.4: The objects clause
Ch.5: The governing document
Ch.6: Setting up an organisation
Ch.7: Registering as a charity
Ch.8: The organisation's name
Ch.9: Branches, subsidiaries, partnerships & mergers
II. GOVERNANCE & MEMBERSHIP
Ch.10: Members of the organisation
Ch.11: Members of the governing body
Ch.12: Officers, committees & sub-committees
Ch.13: Duties & powers of the governing body
Ch.14: Restrictions on expenses, remuneration & benefits
III. RUNNING AN ORGANISATION
Ch.15: The registered office and other premises
Ch.16: Paperwork requirements
Ch.17: Meetings & decision making
Ch.18: Legal agreements
Ch.19: Organisational & personal liability
Ch.20: Insurance
Ch.21: Financial difficulties & winding up
IV. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.22: Employees and other workers
Ch.23: Rights, duties & the contract of employment
Ch.24: Model contract of employment
Ch.25: Equal opportunities in employment
Ch.26: Taking on new employees
Ch.27: Pay & pensions
Ch.28: Working time & leave
Ch.29: Disciplinary matters, grievances & whistleblowing
Ch.30: Termination of employment
Ch.31: Redundancy
Ch.32: Employer-employee relations
Ch.33: Employment claims & settlement
Ch.34: Self-employed workers & other contractors
Ch.35: Volunteers
V. SERVICES & ACTIVITIES
Ch.36: Health & safety
Ch.37: Equal opportunities in provision of goods & services
Ch.38: Confidentiality, privacy, data protection & freedom of information
Ch.39: Intellectual property
Ch.40: Publications & publicity
Ch.41: Campaigning & political activities
Ch.42: Public gatherings & entertainment
Ch.43: Food & drink
VI. FUNDING & FUNDRAISING
Ch.44: Funding & fundraising: General rules
Ch.45: Fundraising activities
Ch.47: Trading companies
Ch.48: Contracts & service agreements
VII. FINANCE
Ch.49: Financial procedures & records
Ch.50: Annual accounts, reports & returns
Ch.51: Auditors
Ch.52: Corporation tax, income tax & capital gains tax
Ch.53: Value added tax
Ch.54: Investment & reserves
Ch.55: Borrowing
VIII. PROPERTY
Ch.56: Land ownership & tenure
Ch.57: Acquiring & disposing of property
Ch.58: Business leases
Ch.59: Property management & the environment
IX. BACKGROUND TO THE LAW
Ch.60: How the law works
Ch.61: Dispute resolution & litigation
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UPDATED INFORMATION FOR CHAPTER 46:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
These websites for each chapter update
the 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking
. It costs £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
Chapter 46
TAX-EFFECTIVE GIVING
GUIDE TO TAX-EFFECTIVE GIVING
Added 2/8/06. This information adds to chapter 46 in The Voluntary Sector Legal Handbook 2nd edition.
Making Giving Go Further: The definitive guide to tax-effective giving was published by the Institute of Fundraising in June 2006, covering gift aid, share donations, legacies and other forms of tax-effective giving. Available on paper and CD, the CD guide includes template articles, letters and press releases, for charities to use on promotional material. Free copies are available from the Institute on 0845 458 4586 or by emailing taxback@institute-of-fundraising.org.uk.
TAX BENEFITS FOR COMMUNITY AMATEUR SPORTS CLUBS
Updated 10/2/05; links updated 22/12/05. This information updates ss.46.2 & 52.8 in The Voluntary Sector Legal Handbook 2nd edition.
The Department for Culture, Media and Sport is encouraging more amateur sports clubs to register with the Inland Revenue as a community amateur sports club (CASC). CASCs get 80% mandatory rate relief, exemption from capital gains tax on disposals of assets, and exemption from corporation tax on bank and building society interest, trading income up to £30,000 per year and gross property income up to £20,000 per year. Provided the CASC does not exceed these limits, it does not have to complete a corporation tax return. In addition, CASCs are entitled to claim gift aid on donations by individuals. Full details are at www.hmrc.gov.uk/casc.
GIFT AID GUIDANCE
Added 1/7/07. This information updates s.46.2 in The Voluntary Sector Legal Handbook 2nd edition.
HM Revenue & Customs has updated its detailed guidance on gift aid at www.hmrc.gov.uk/charities/guidance-notes/chapter3/index.htm. The section on particular situations covers educational school trips, church collections, educational trusts, membership subscriptions, sponsorship payments for adventure fundraising events, donations that attract a right of admission to view charity property, charity auctions, voluntary workers' expenses, gifts of goods, and charity events.
The section on individuals covers, among other things, the rules on record-keeping. One point to note is that the relaxation of the rules after the tsunami — removing the requirement to confirm in writing declarations made orally — has been reversed. If there is a recording of the oral declaration it does not need to be confirmed in writing, but if there is no audible version, the organisation must write to the donor to confirm it.
GIFT AID
Added 26/4/09. This information is included in s.50.2 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
HM Revenue & Customs has issued a revised gift aid declaration form, showing the dates of the tax year (6 April to 5 April). The form is at www.hmrc.gov.uk/charities/appendix_b1.pdf. There is no need to ask donors who have already made declarations to change them, but charities and community amateur sports clubs should use the new form (or revise their own form so it follows the recommended wording on the new HMRC form) for new declarations.
Currently, tax on gift aid donations can be recovered for up to six years from the end of the tax year in which the donation was made, but to get transitional relief (the 3p in the £1 supplement for gift aid donations in 2008/09, 2009/10 and 2010/11) the claim must be made within two years from the end of the tax year. The six-year limit for ordinary claims (without transitional relief) will decrease to four years from April 2010.
HMRC's guidance on all aspects of gift aid is at www.hmrc.gov.uk/charities/gift_aid/basics.htm.
NEW FORMS FOR APPOINTING GIFT AID SIGNATORIES
Added 19/8/05. This information updates s.46.2 in The Voluntary Sector Legal Handbook 2nd edition.
HM Revenue and Customs introduced in August 2005 three new forms for gift aid:
GIFT RECOVERY TAX RECOVERY AND SUPPLEMENT
Added 5/4/08. This information updates s.46.2.1 in The Voluntary Sector Legal Handbook 2nd edition.
The drop in basic rate income tax from 6 April 2008, from 22% to 20%, could have meant a reduction in the amount that charities could reclaim in Gift Aid donations, from 28.2p for each £1 donation to 25p for each £1. In response to charities' concerns about this potentially very significant drop in income, the government announced on 12 March 2008 that a transitional relief top-up fund will be established, to enable charities to receive gift aid supplement on donations received during 2008/09, 2009/10 and 2010/11. Charities will still reclaim tax at the basic rate for that year (20% in 2008/09), but the amount they actually receive will be calculated at 2% more than the basic rate for that year (so it will be calculated at 22% in 2008/09).
So with basic rate tax at 20% the charity will reclaim 25p for each £1 donation, and will automatically receive an additional 3.2p as gift aid supplement — thus enabling charities to continue to receive 28.2p.
In addition Gift Aid record-keeping and claims procedures will be simplified, and it will be easier to correct errors in claims.
The provisions for Gift Aid supplement are in the draft Finance Bill 2008, which can be accessed via tinyurl.com/4r6qna.
The government's proposals for simplifying and promoting Gift Aid, announced in the Budget on 12 March 2008, can be accessed via tinyurl.com/42gl8d.
INCREASE IN GIFT AID BENEFITS
Added 1/4/07. This information updates s.46.2.1 in The Voluntary Sector Legal Handbook 2nd edition.
For gift aid donations of £1000 or more made by individuals to a charity or registered community amateur sports club on or after 6 April 2007, the maximum value of the benefit the donor can receive is increased from 2.5% to 5% of the donation, with the maximum value increased from £250 to £500. The value of benefits that can be provided to individuals who donate less than £1000 remains 25% if the donation is £100 or less, and 2.5% if the donation is more than £100 but less than £1000.
For gift aid donations by corporate donors in accounting periods ending on or after 6 April 2007, the maximum value of benefits they can receive is increased from 2.5% to 5%, with the maximum value increased from £250 to £500.
The changes are in s.59 of the Finance Bill 2007.
HM Revenue & Customs' basic guidance on benefits provided in return for gift aid donations is at www.hmrc.gov.uk/charities/giftaid-charities/benefits.htm. This will not reflect the changes until the Finance Bill is passed (and probably not for a while after).
MISTAKENLY CLAIMING GIFT AID ON PROVISION OF GOODS OR SERVICES
Added 19/8/05. This information updates s.46.2.1 in The Voluntary Sector Legal Handbook 2nd edition.
In general gift aid can be claimed only on pure donations. There are, however, exceptions where the donor receives a small benefit complying with the donor benefit rules, or where there is a specific exception such as for admission to conservation and heritage charities (see below).
A case in May 2005, where the Labrador Lifeline Trust was given 28 days to repay to the Inland Revenue £11,300 of mistakenly claimed gift aid, illustrates the importance of these rules. Rather than emphasising to people who were receiving a dog that a donation was purely voluntary and would help the charity's work, the impression was given that the so-called donation was a necessary requirement to receive a dog and was therefore a payment for a service. The Revenue ruled that the charity was therefore not eligible to claim gift aid on those donations.
The rules on gift aid are at www.hmrc.gov.uk/charities/chapter_3.pdf.
GIFT AID ON ADMISSIONS
Updated 2/8/06. This information updates s.46.2.1.1 in The Voluntary Sector Legal Handbook 2nd edition.
From 6 April 2006 the gift aid scheme for admissions to charity property was extended to cover not only conservation and heritage charities which were already eligible, but also any charity which charges admission to the public for viewing property maintained for charitable purposes. The viewing may be of buildings, grounds or other land, plants, animals, works of art (but not performances), artefacts, and property of a scientific nature.
Gift aid can be used only if:
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the right of admission applies to the donor, or the donor and one or more members of his or her family;
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the right of admission applies for a whole year, or if it is for a shorter period (e.g. a day or weekly admission) the donor makes a donation of at least 10% more than the public admission charge for that period.
The usual gift aid rules requiring the donor to make a gift aid declaration apply.
For HM Revenue and Customs' revised guidance, issued on 13 June 2006, click here. Useful frequently asked questions are at www.hmrc.gov.uk/charities/gift-aid-on-donations.htm.
GIFT AID ON TELEPHONE AND ELECTRONIC DONATIONS
Added 22/12/05. This information updates s.46.2.2.2 in The Voluntary Sector Legal Handbook 2nd edition.
From 1 November 2005 charities receiving gift aid declarations by telephone, internet and SMS text message no longer have to write to each donor giving them 30 days to cancel the declaration. Great news--except that the revised rules apply only where the charity has satisfactory procedures for keeping auditable records, such as digital recordings of telephone calls, emails and text messages, for six years. There also needs to be evidence that the charity has provided to the donor, over the telephone or in some other way, the information currently required for the declaration. And if HM Revenue & Customs find that the records are not satisfactory, the charity will have to send written declarations to all affected donors.
The Donations to Charity by Individuals (Appropriate Declarations)(Amendment) Regulations 2005 are at www.opsi.gov.uk/si/si2005/20052790.htm. At the time of writing, HMRC does not appear to have issued guidance about the records that need to be kept.
PAYROLL GIVING INCENTIVES
Added 10/2/05. This information updates s.46.3 in The Voluntary Sector Legal Handbook 2nd edition.
The payroll giving scheme enables employees to make charitable gifts by deduction from their salary. The deduction is made from gross pay (before tax is deducted so the donor saves the tax (or hopefully includes it in the donation to the charity). From 26 January 2005 the government's new Payroll Giving Grants programme is providing incentives for bodies with up to 500 employees to register for payroll giving.
Bodies (including charities and voluntary organisations) which register for payroll giving between 6 April 2004 (i.e. backdated to last year) and 31 December 2006 will receive a one-off grant of £300 for bodies with 1-199 employees, £400 for those with 200-249 employees, and £500 for those with 250-499 employees.
And until the scheme ends in March 2007, the government will match each employee's donations for six months, to a maximum of £10 per employee per month.
Charities should encourage every business or other employer they know to register for payroll giving. Charities themselves should also register (and thus receive the grant), and encourage their employees, members, supporters and beneficiaries who are employed to donate to the charity through the scheme. Charities can benefit in three ways: from the grant, regular donations, and the £10 matched payment for six months.
The scheme is administered by the Institute of Fundraising and Business in the Community. Full details for employers, charities and employees are at www.payrollgivinggrants.org.uk or via 0845-602 6786. The Institute is running training for charities throughout the UK.
CHARITABLE GIVING THROUGH TAX SELF ASSESSMENT
Updated 29/12/03. This information adds a new section after s.46.3 in The Voluntary Sector Legal Handbook 2nd edition.
From April 2004, people who complete a self assessment tax return are able to nominate a charity to receive all or part of any repayment due to them. The charity has to be registered for this scheme with the Inland Revenue. Details of the scheme and an application form are at www.hmrc.gov.uk/charities/giving_sareturn.htm or from 0845-302 02 03.
Donations plus gift aid tax are paid direct to the charity's bank account, without the charity having to make a gift aid claim. For the first time, donations made anonymously are entitled to gift aid.
TAX INCENTIVES FOR CORPORATE GIVING
Added 19/8/05. This information adds to s.46.7 in The Voluntary Sector Legal Handbook 2nd edition.
A guide to tax incentives for corporate giving, published by HM Treasury and the Home Office, is a simple introduction to the many ways businesses can support good causes: donations of money, shares, land, trading stock or equipment; sponsorship; seconding employees; encouraging employees to volunteer or make donations; and investing in urban improvement or disadvantaged communities. The guide is at www.hmrc.gov.uk/charities/guide_tax_incentives.pdf.
COMMUNITY INVESTMENT TAX RELIEF
Added 21/9/03; links updated 22/12/05. This information adds a new section in chapter 46 in The Voluntary Sector Legal Handbook 2nd edition.
Since January 2003, individuals and corporate bodies are entitled to community investment tax relief when they invest in accredited Community Development Finance Institutions (CDFIs) which in turn provide finance for profit-distributing businesses, social enterprises and community organisations. The CITR scheme is jointly administered by the DTI and HM Revenue and Customs (www.hmrc.gov.uk/specialist/citc_guidance.htm, and further information is in available from the Community Development Finance Association at www.cdfa.org.uk.
BIODIVERSITY PROJECTS ELIGIBLE FOR
LANDFILL TAX CREDIT
Added 2/10/03. This information updates s.46.8 in The Voluntary Sector Legal Handbook 2nd edition.
Organisations working for biodiversity are eligible, from 1 October 2003, to receive donations under the landfill tax credit scheme. Under this scheme, waste producers can get tax credits for donations made to environmental bodies which are registered with Entrust. Organisations working for conservation of a natural habitat or a species in its natural habitat, on land or in water situated in the vicinity of a UK landfill site, are now eligible to register with Entrust to receive the donations.
A general guide to landfill tax is at www.hmce.gov.uk/forms/notices/lft1.htm and the new Landfill Tax (Amendments) (No.2) Regulations 2003 are at www.opsi.gov.uk/si/si2003/20032313.htm.
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