Guidance

Newsletter 1 — June 2023

Published 5 June 2023

1. Introduction

This is the first publication of the charities newsletter. HMRC will use this newsletter to keep you updated on developments likely to be of interest to your charity.

You can sign up to receive email alerts each time a newsletter is published.

2. Restriction of tax reliefs

At Spring Budget 2023, the government announced that with effect from 15 March 2023, tax reliefs and exemptions for charities will be restricted to UK charities.

Any non-UK charities that were registered with HMRC for tax reliefs and exemptions as of 15 March 2023, will continue to be able to claim these until 5 April 2024.

The taxes affected are Income Tax, Capital Gains Tax, Corporation Tax, Inheritance Tax, Stamp Duty, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Annual Tax on Enveloped Dwellings and Diverted Profits Tax.

More information can be found at Restriction of Charitable Reliefs to UK Charities.

3. Charity compliance consultation

At tax administration and maintenance day on 27 April 2023, it was announced that HMRC will consult with the charities sector on reform of the tax rules to help tackle non-compliance, whilst protecting the integrity of the sector.

For charities to benefit from the tax reliefs that they are eligible for, certain rules must be met, however, some of these rules are not working as intended.

HMRC will work with the charities sector to explore reasonable and proportionate changes to the rules. Engagement with the sector will allow HMRC to understand any potential administrative or financial impact on charities that may arise from any changes made.

The measures being considered include:

• reviewing the rules around preventing donors and connected persons from obtaining a financial benefit from their donation
• reviewing the rules covering prevention of abuse of the charitable investment rules
• closing a gap in non-charitable investment rules
• the possibility of sanctioning charities that do not meet their filing and payment obligations

More information can be found in the Charities tax compliance consultation document.

4. Future of Gift Aid

On 27 April 2023, it was also announced that HMRC will continue to engage with the charities sector to improve the way that Gift Aid works by using digital technology to minimise administrative burdens. HMRC are currently looking at how the Gift Aid service can be improved for everyone who uses it.

We will review the current processes for claiming Gift Aid that are used by charities. This review will also include looking at the viability and desirability of new systems and better use of digital technology and online services to help donors better understand the rules and simplify the process of claiming Gift Aid.

4.1 User research

To inform potential changes to Gift Aid, we are interested in speaking to a range of charities with relevant experience of using the Gift Aid service, including:

• small, medium, and large charities
• charities who claim Gift Aid using the full range of available routes, including the charities portal, agents, paper forms, through APIs, and through agent intermediaries such as Just Giving
• charities who claim both Gift Aid and through the Gift Aid Small Donation Scheme (GASDS)
• charities whose Gift Aid claims are submitted by both employees and volunteers
• charities who do not claim Gift Aid

Our aims are to understand the experience of charity officials using the service, including the broader context in which you’re submitting Gift Aid claims. Research can be organised at a time that is convenient for you.

If you would be interested in taking part, or have any questions about the research, please email our user researcher Niamh Collard at niamh.cliffordcollard@hmrc.gov.uk.

5. Guidance updates

We have made an update to the guidance for Charities: detailed guidance notes on how the tax system operates at chapter 8: The Gift Aid Small Donations Scheme before 6 April 2017, example 2, paragraph 4. This contained an incorrect calculation, which has now been corrected.

6. Reminders

6.1 Updating your details

You should use the online form ChV1, ‘Change of Details’ to tell HMRC about any changes to your charity, for example new officials or change of bank account.

6.2 Changes in status

When the status of a charity changes, for example changing from an unincorporated to incorporated charity, the relevant charity regulator may let the charity retain their registration number.

However, as the change creates a new legal entity you cannot continue using your existing HMRC reference number. You will need to make a new application to get recognition from HMRC for your charity and once approved, a new HMRC reference number will be provided.

6.3 Overpaid Gift Aid

When you make a claim for Gift Aid, there is an option to include a tax adjustment, so you can repay any previously overpaid Gift Aid. To ensure this is used correctly and to avoid delays in receiving your repayment, please remember the amount:

• in the adjustment box should be the tax amount rather than the donation amount - for example, you have received a donation of £20 on which you claimed Gift Aid, this donation no longer qualifies, so you wish to repay the Gift Aid claimed — the amount to enter in the tax adjustment is £5.00 (If this amount is not correct HMRC will need to contact you, delaying your payment.)
• entered into the tax adjustment box must not be greater than the amount you are claiming (HMRC cannot process claims resulting in negative amounts — if you have an overpayment which is larger than your next claim, please contact us at charitiesrepaymentqueries@hmrc.gov.uk with full details.)

6.4 Gift Aid Small Donations Scheme

This is a reminder that the deadline for submission of a claim under GASDS is 2 years from the end of the tax year in which the small donation was made. Any donations collected under the GASDS should not be included within the Gift Aid schedules.