Alistair Darling proposes changes to substantial donor legislation

Pre-Budget report includes details of plans to penalise errant donors rather than charities

Chancellor Alistair Darling has proposed changing substantial donor legislation so that the emphasis is on penalising donors, rather than charities, if a donation contravenes the law.

Substantial donor legislation, applicable to gifts of more than £25,000, was introduced two years ago with the intention of stopping wealthy people obtaining advantages from making donations to a charity, including benefits from the charity to themselves or their relatives.

Darling said there would be "new rules to deny tax relief on donations to charities where the donor is party to an arrangement, the purpose or one of the main purposes of which is to extract value from the charity".

Nick Brooks, head of not-for-profit at accountants Kingston Smith LLP, welcomed the announcement but said the devil would be in the detail of any draft legislation.

"The emphasis is now on the donor to deny themselves Gift Aid relief if there is an arrangement where some benefit will be returned to the donor," said Brooks. "Until now the obligation has been on the charity."


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