Corporation Tax Act 2010 section 472

Gifts qualifying for gift aid relief: corporation tax liability and exemption

Section 472 explains how gift aid donations received by a charitable company are treated for corporation tax purposes, including the charge that arises and the exemption available when the funds are used for charitable activities.

• When a charitable company receives a qualifying gift aid donation from an individual, the grossed up amount of that gift is treated as income chargeable to corporation tax.
• The grossed up amount is exempt from inclusion in total profits provided it is applied solely to charitable purposes.
• Grossing up means increasing the gift amount by reference to the basic rate of income tax for the tax year in which the gift is made.
• The exemption for charitable use is not automatic — the charitable company must make a formal claim to obtain it.