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HMRC internal manual

Double Taxation Relief Manual

Non-residents: UK income: Gift Aid payments

Gift Aid is a relief for large single donations to charities established in the United Kingdom. The relief was introduced in 1986 for non-close companies and was extended in 1990 to cover gifts by close companies and individuals.

ICTA88/S339 (2) provides that relief shall not be due unless the company making the payment is resident in the United Kingdom. FA90/S25 (2)(i) similarly confines relief to individuals resident in the United Kingdom.

Where a Gift Aid payment is made by a company or an individual resident in a state with which the United Kingdom has an agreement which includes a non-discrimination Article, relief may be given provided that the non-resident company or the non-resident individual is carrying on business in the United Kingdom through a permanent establishment and the payment is made by that permanent establishment. In the case of individuals, this excludes people who perform professional services through a fixed base.

In addition, the non-resident company or individual must comply with whatever requirements are imposed by the legislation on United Kingdom resident payers. In the case of non-resident companies this includes the obligation to deduct and account for income tax when making the payment; the limitation of the relief to three per cent of the dividends paid in the relevant accounting period on the company’s ordinary share capital; and, for payments made in the period 1 April 1986 to 30 September 1990 inclusive, the requirement that the company would not be a close company if it were resident in the United Kingdom (CT906).