In the second part of my mini-series on taxes and reliefs affecting charities, I identify and discuss a further 5 areas where charities may be affected by UK tax legislation, including business rates relief.<\/p>\n
1 Inheritance Tax<\/strong><\/span> Transfers of property to a charity are generally exempt from inheritance tax, as long as the property is held for charitable purposes.<\/p>\n 2 Gifts of Land and Shares<\/strong><\/span> These reliefs are available to the donor \u2013 the charity benefits from receiving the assets.<\/p>\n 3 Stamp Duty Land Tax<\/strong><\/span> There are conditions that may require repayment of the relief, for example if there are changes in circumstances of the charity and\/or the use of the property.<\/p>\n 4 Business Rates Relief<\/strong><\/span> However, this relief is not usually available if the property is held or occupied by a charity\u2019s trading subsidiary since this carries out non-charitable activities.<\/p>\n 5 VAT<\/strong><\/span> Even if a charity is not considered to be trading, it may be carrying out a business activity that requires it to register for VAT, such as charging admission to view property, selling advertising space or sponsorship in return for providing the donor with a benefit, and hiring out property.<\/p>\n If undertaking fundraising events, a charity may not need to charge VAT on income from the sale of tickets if the events are clearly organised and promoted with the aim of generating funds for the charity and its charitable activities.<\/p>\n Charities may carry out certain activities that are zero-rated \u2013 this requires them to register for VAT, but allows them to recover the VAT paid in relation to these activities without charging VAT on its supplies. Such activities include sale or hire of goods donated to the charity.<\/p>\n If a charity does carry out a business activity that requires it to register for VAT, then it can reclaim VAT incurred in connection with this business activity.<\/p>\n Charities are also entitled to various VAT reliefs on expenditure not available to individuals or businesses. Currently, these include a reduced rate of VAT charged on fuel, power, and certain energy saving materials used in a charitable building, and zero-rated supplies including advertising, certain medicinal products, and selected goods used in connection with collecting donations.<\/p>\n Conclusion<\/strong><\/span> In the second part of my mini-series on taxes and reliefs affecting charities, I identify and discuss a further 5 areas where charities may be affected by UK tax legislation, including business rates relief. 1 Inheritance Tax Reliefs are available to individuals leaving at least 10% of their estate to charity, with the estate attracting[…] <\/p>\n
\nReliefs are available to individuals leaving at least 10% of their estate to charity, with the estate attracting a lower inheritance tax rate.<\/p>\n
\nGifting certain assets such as land, UK listed shares, and some other investments to charity can generate income and capital gains tax reliefs for the donor, subject to certain criteria and anti-avoidance provisions.<\/p>\n
\nCharities are generally exempt from paying stamp duty land tax (SDLT) where the property is used directly for charitable purposes, or indirectly by generating investment income to fund its activities.<\/p>\n
\nCharities occupying commercial property used for charitable activities are entitled to 80% relief against the full business rates – and local authorities can waive the other 20% if they wish.<\/p>\n
\nVAT affects a charity in several ways, such as whether a charity is required to charge VAT on any services it provides, whether it is able to reclaim any VAT it has suffered, or whether it is entitled to relief on the goods and services it buys.<\/p>\n
\nUK tax legislation can be a minefield, and it is now more important than ever that organisations are aware of their responsibilities. However, there can be generous allowances and reliefs available – so please do get in contact if I can assist your organisation take advantage of these whilst fulfilling your compliance requirements.<\/p>\n","protected":false},"excerpt":{"rendered":"