HM Treasury is consulting again until 3 February 2017 on revised proposals for changes to the gift aid donor benefit rules, following an inconclusive response to the previous consultation held earlier this year. The latest document proposes three new variants of the relevant value test, in combination with a disregard for low value benefits.
Overall, it was felt that the monetary thresholds underlying the relevant value test should be retained in some form. The three new proposals for the relevant value test are set out below.
Retain three thresholds:
o keep the current 25% limit on benefits for donations up to £100;
o reduce the upper limit for the £25 threshold for donations over £100 from £1,000 to £499; and
o apply the 5% threshold to donations of £500 and over.
Single threshold: set at a rate around 10% if accompanied by a disregard for low value benefits, or around 15% without a disregard.
Two thresholds: involving a calculation of the donor benefits allowed for a single donation using two different percentage rates applied to a defined slice of the overall amount, for example:
o 25% of the first £100; plus on any amount over £100, either:
o 2% to 4% if a low value disregard operates alongside; or
o 5% without a disregard.
HMRC is also seeking views on a minimum level for the low value disregard, if combined with the thresholds above.
A working group comprising HMRC, HM Treasury and charity sector representatives will be formed to improve the guidance on how donor benefits are valued and consider how HMRC applies the law in this area.
The government has confirmed that it does not plan to extend the gift aid admissions disregard beyond those heritage charities which currently operate the scheme.
Four ESCs will be legislated, concerning:
the split payment rule (where the market value of a benefit can be established);
the averaging method;
10 year rule for valuing a ‘lifetime’ benefit; and
literature of inconsequential value.
The government has also promised to ensure that the final changes are announced at least six months ahead of their implementation. See here.
HM Treasury is consulting again until 3 February 2017 on revised proposals for changes to the gift aid donor benefit rules, following an inconclusive response to the previous consultation held earlier this year. The latest document proposes three new variants of the relevant value test, in combination with a disregard for low value benefits.
Overall, it was felt that the monetary thresholds underlying the relevant value test should be retained in some form. The three new proposals for the relevant value test are set out below.
Retain three thresholds:
o keep the current 25% limit on benefits for donations up to £100;
o reduce the upper limit for the £25 threshold for donations over £100 from £1,000 to £499; and
o apply the 5% threshold to donations of £500 and over.
Single threshold: set at a rate around 10% if accompanied by a disregard for low value benefits, or around 15% without a disregard.
Two thresholds: involving a calculation of the donor benefits allowed for a single donation using two different percentage rates applied to a defined slice of the overall amount, for example:
o 25% of the first £100; plus on any amount over £100, either:
o 2% to 4% if a low value disregard operates alongside; or
o 5% without a disregard.
HMRC is also seeking views on a minimum level for the low value disregard, if combined with the thresholds above.
A working group comprising HMRC, HM Treasury and charity sector representatives will be formed to improve the guidance on how donor benefits are valued and consider how HMRC applies the law in this area.
The government has confirmed that it does not plan to extend the gift aid admissions disregard beyond those heritage charities which currently operate the scheme.
Four ESCs will be legislated, concerning:
the split payment rule (where the market value of a benefit can be established);
the averaging method;
10 year rule for valuing a ‘lifetime’ benefit; and
literature of inconsequential value.
The government has also promised to ensure that the final changes are announced at least six months ahead of their implementation. See here.
