Inland Revenue 4
17 March 1998
'MILLENNIUM GIFT AID' TO HELP THE WORLD'S POOREST COUNTRIES
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The Chancellor today announced 'Millennium Gift Aid', to
support education and anti-poverty projects in the world's
poorest countries as we enter the next century. The scheme
will encourage individuals and businesses in the UK to help
people in these countries through tax relief on donations.
The Chancellor said:
"'Millennium Gift Aid' will make it easier for businesses and
individuals to play a crucial role in reducing disadvantage,
both in living conditions and in opportunity, in the world's
poorest countries. Tax incentives of this kind are one way of
encouraging charitable giving to help those who are truly in
need."
'Millennium Gift Aid' will lower the minimum donation which
gets Gift Aid relief from 250 pounds to 100 pounds where an
individual gives to these causes. The Chancellor has also
proposed relief for individuals who make a number of smaller
donations by instalments totalling 100 pounds.
Businesses will get extra tax relief when they donate goods to
help education projects.
'Millennium Gift Aid' will be launched later this year and
continue until the end of the year 2000. Any charities working
to support education and anti-poverty projects in the world's
poorest countries will be able to raise money in this way.
DETAILS
1. At a seminar held on 17 December to discuss progress on
the Mauritius Mandate programme, the Chancellor announced
that he was considering tax incentives to encourage charitable
gifts to educational and anti-poverty projects in the world's
poorest countries. He asked the Inland Revenue to consult on
the details.
2. Since then, the Inland Revenue have received comments
from a wide range of interested parties. As a result, the
Government has decided the initiative should take the form of
a distinctive scheme, to be known as 'Millennium Gift Aid'.
It is intended that the scheme should be run by existing
charities which have the necessary structure and expertise to
allocate the funds raised to new or existing projects in the
target countries. Any recognised UK charity will be able to
take part in the scheme if it can satisfy the necessary
criteria which will be set out in legislation in the Finance
Bill and in subsequent Regulations.
3. Under the new proposals, Gift Aid relief will be given
for gifts of 100 pounds to the target causes which are made
between the start date of the scheme, later this year, and 31
December 2000. The relief will apply to single payments of
this amount or more, subject to the existing conditions for
Gift Aid, and, in addition, to gifts made by instalments once
those instalments have reached 100 pounds or more.
4. Similarly, the tax arrangements for giving in-kind by
businesses, which currently apply only to gifts to schools and
colleges in the UK, are being extended for the same period to
assist educational projects in these countries.
5. Countries eligible to benefit will be those designated as
"low income countries" by The World Bank for the purpose of
granting International Development Aid loans, predominantly
the developing countries in Africa and Asia. A list of
countries which are currently designated as "low income
countries" by The World Bank is attached at Annex A.
6. Charities wishing to participate in the scheme will
register their intention in advance with the Inland Revenue.
7. A further press release will be issued in due course to
explain more fully what charities and donors will need to do
in order to participate in the initiative and to announce the
date on which the scheme will begin.
8. These special time-limited measures are being introduced
against the background of the wider Charities' Taxation Review
announced last year. That Review is looking at all aspects of
charities' taxation, particularly the current VAT
arrangements. The Government intends to issue a consultation
document, setting out proposals for further discussion, in the
spring. Today's announcement is in no way intended to
anticipate the Government's decisions on the outcome of the
wider Review. However, the Government hopes that experience
of operating the measures announced today may provide useful
guidance on the practicality of provisions of a similar kind
for the charitable sector as a whole.
NOTES FOR EDITORS
1. The UK tax system already has a wide range of incentives
to encourage giving to charity. Gifts by both individuals
and companies can qualify for income or corporation tax relief
under a range of schemes; legacies to charity qualify for
relief from Inheritance Tax, and the income of charities
themselves is already very largely relieved from tax.
2. Gift Aid is a relief for one-off cash gifts to charity
introduced in 1990. They generally have to be 250 pounds or
more. The rules are at Section 25, Finance Act 1990, for
individuals, and at Section 339 of the Income and Corporation
Taxes Act 1988 ("ICTA 1988") for companies.
3. Traders who give used plant or machinery to schools and
colleges - typically second hand computer equipment - can do
so without bringing its market value into account for tax
purposes. The same applies when traders give their own
trading stock. The rules are at Section 84 of ICTA 1988, which
was introduced by Section 68 of the Finance Act 1991.
4. Consultation on the Chancellor's proposals for an
initiative to support the world's poorest countries was
announced in an Inland Revenue press release of 17 December
1997.
5 The charity tax review was announced in a Treasury press
notice of 2 July 1997.
6 The estimated cost of the extra reliefs for individual
giving are 15 million pounds in 1998-1999, 25 million pounds
in 1999-2000 and 20 million pounds in 2000-2001.
INLAND REVENUE PRESS OFFICE
Media enquiries to: 0171 438 6692/6706/7327
(Out of hours: 0860 359544)
Non media enquiries to: 0171 438 6420/6425
(Office hours only)
Annex A
Eligible Countries:
Afghanistan Kenya
Albania Kyrgyz
Angola Republic Laos
Armenia Liberia
Azerbaijan Madagascar
Bangladesh Malawi
Benin Mali
Bhutan Mauritania
Bosnia & Herzegovina Mongolia
Burkina Faso Mozambique
Burundi Myanmar
Cambodia Nepal
Cameroon Nicaragua
Central African Republic Niger
Chad Nigeria
China Pakistan
Comoros Rwanda
Congo Republic Sao Tome and Principe
Cote d'Ivoire Senegal
Democratic Republic of the Congo Sierra Leone
Equatorial Guinea Somalia
Eritrea Sri Lanka
Ethiopia Sudan
Gambia Tajikistan
Georgia Tanzania
Ghana Togo
Guinea Uganda
Guinea-Bissau Vietnam
Guyana Yemen
Haiti Zambia
Honduras Zimbabwe
India