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UK Charities and Community Amateur Sports Clubs (CASCs) claim repayments
of tax in respect of qualifying Gift Aid donations on the basis that the
donations are made net of basic rate tax relief. With effect from 6 April
2008, the basic rate of tax will reduce from 22% to 20%. Charities and CASCs
would potentially only be able to claim repayment of a reduced amount of
tax. Their income would drop by over 3%.
However, transitional measures will be introduced which apply in respect of
qualifying donations made between 6 April 2008 and 5 April 2011. As a result
of these provisions, HMRC will be required to pay a transitional relief
supplement of 2%, (before grossing adjustment) based on the qualifying
donations.
Our view
This will be welcome news for charities and CASCs. The measures
announced will preserve the current level of tax repayment for the next
three tax years. |
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