Pothecary Witham Weld Solicitors

The Government’s 2011 Budget includes measures intended to encourage charitable giving and to support the voluntary sector.

The key changes put forward in the Budget are:

• From April 2012 if a person leaves 10% or more of their estate in their will to charity, the remaining chargeable sum in that person’s estate will be charged at 10% less than the usual rate. This means that instead of paying inheritance tax at the usual 40% the government will apply the lower rate of 36%.
• From April 2013 charities will be able to claim Gift Aid on up to £5,000 of small donations without the need for Gift Aid declaration forms for each donation. Note this is only available to charities that have been in existence for, and complied with the tax rules for, at least three years i.e. unbroken compliance from April 2010.
• From April 2012 there will be an increase in the Gift Aid benefit limit from £500 to £2,500 from April 2011 to enable charities to give ‘thank you’ gifts, to recognise the generosity of significant donors.
• Transport: from 6th April 2011 the passenger allowance of 5p per mile, which is already available to business, will be extended to volunteers. The Approved Mileage Allowance Payments rate, which applies equally to businesses and the voluntary sector, will rise from 40p per mile to 45p (25p after the first 10,000 miles).
• There will be a new system of online filing for Gift Aid donations. Expected in 2013.
• A consultation will be launched this year on a proposed scheme to encourage the giving of important works of art to the nation by offering donors a reduced tax bill.

The effect of a number of these measures is hard to ascertain immediately. Will we see larger proportions of estates passed to charities as a result of the 36 per cent inheritance tax offering? That said the Budget demonstrates a clear intent by the Government that is welcomed. In a few days’ time thousands of charities and voluntary organisations will benefit from the increase in the mileage allowance for drivers and passengers.  Another important change for our clients will be the removal of the need for Gift Aid forms for small donations up to a total of £5,000.  This will mean that money collected in tins, buckets or collection plates could now attract Gift Aid relief.

If you would like further information on this subject or have any comments please contact Arthur Byng Nelson or your usual contact at Pothecary Witham Weld.

31st March 2011

Pothecary Witham Weld
70 St George’s Square
London
SW1V 3RD