Income Tax Act 2007 section 521

Gifts entitling donor to gift aid relief: income tax liability and exemption

Section 521 sets out the income tax charge that can arise on gift aid donations received by charitable trusts, and the exemption that applies when those gifts are used for charitable purposes.

• Gift aid donations made by individuals to charitable trusts are subject to an income tax charge on their grossed up amount, calculated by reference to the basic rate of income tax for the year of the gift.
• Where the gift is applied solely to charitable purposes, it is exempt from being included in the calculation of total income.
• The trustees of the charitable trust are liable for any income tax charged on the gifts.
• Transitional payment provisions applied to gifts made in the tax years 2008-09 to 2010-11 under Schedule 19 to Finance Act 2008.