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Gifting cash and assets to charity

Gifting cash and assets to charityThere are a number of tax reliefs available for gifts to charities. This note sets out the UK tax treatment of gifts to organisations established in part of the UK with purposes regarded as charitable under the law of England and Wales. See the Foreign charitable trusts and other foreign charities guidance note for information on gifts to other entities of a charitable nature.Gift aidGift aid is a way for charities or community amateur sports clubs to increase the value of monetary gifts from UK taxpayers by claiming back the basic rate of tax paid by the donor.See the Gifts of cash guidance note in the Personal Tax module for details of the conditions for a qualifying donation and the tax relief available to the individual.Record keepingA charity must maintain evidence to satisfy HMRC that a payment has been made and by whom. For full details of the records to be kept by a charity and the format in which the records may be stored, see the HMRC website.Planning issues for charities Charities should encourage all donors to make use of gift aid. If a charity receives a simple cash gift it should consider contacting the donor to ask whether it would be appropriate to send him a gift aid declaration. The charity can bank the donation in the meantime.Payroll givingPayroll giving (often called 'give as you earn') is a way for employees to make regular payments to charity directly from their salary. People who

Ordinary residence — issues on leaving the UK up to 5 April 2013

Ordinary residence - issues on leaving the UK up to 5 April 2013STOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.IntroductionOrdinary residence was abolished from 6 April 2013. There are transitional provisions for up to three years for those who are not ordinarily resident in the UK and are adversely affected by the changes. You should consider this when advising on this subject.This guidance note considers the application of the ordinary residence to people leaving the UK in the tax years up to 5 April 2013.The tax rules on UK ordinary residence are explained in the Ordinary residence - years to 5 April 2013 guidance note, and it is recommended that you read that note first. The transitional rules are discussed in the Ordinary residence - transitional rules (2013/14 to 2015/16) guidance note.You may also find the Residence - issues on leaving the UK up to 5 April 2013 guidance note

Utilities, council tax and other bills in accommodation

Utilities, council tax and other bills in accommodationThe payment of an employee’s council tax or utility or other bills is usually linked to the provision of living accommodation to the employee.Whether or not the payment of council tax or utility bills is treated as a taxable benefit depends on whether the reason for the provision makes it an exempt benefit under specific legislation.Payments in respect of gas and electricity made by an employer in relation to employer-provided accommodation are always taxable. However, how and why the benefit is provided to the employee determines both the value of the benefit and reporting requirements.Council tax and utility bills ― exemptionsWhether or not the payment of council tax or utility bills on behalf of the employee constitutes a taxable benefit depends on why the amounts have been paid.If the payment of council tax does not fall into one of the exemptions below then the full amount is taxable. The section on ‘reporting requirements’ below sets out how it should be reported and taxed.Exemptions applicable to council tax or utility billsThe payment of council tax or utility bills (specifically council tax, water charges or sewerage charges) is not taxable if it is provided in connection with living accommodation which is exempt from tax either as job-related accommodation or due to a security threat; this is confirmed by HMRC guidance at EIM11332. Broadly, there are two exemptions:•job-related accommodation ― where either the accommodation is necessary for the proper performance of the duties, or

Remittance basis ― overview with employment focus

Remittance basis ― overview with employment focusSTOP PRESS: At Spring Budget 2024, the Chancellor announced that the remittance basis would be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.Key points•provided certain conditions are met, Overseas Workday Relief (OWR) can be an extremely valuable form of tax relief for non-domiciled individuals who perform employment duties both in the UK and overseas•OWR is only available in the tax year of arrival and subsequent two tax years following a three year period of non-residence•OWR is generally calculated by reference to the percentage of days an individual spends working overseas•a bank account which qualifies for the special mixed fund rules allows for all offshore transfers to be treated as one single transfer for the year and all remittances as one single remittanceIntroduction ― the remittance basisThe default position for employees who are resident in the UK for tax purposes is that they are chargeable to income tax on their worldwide income and gains. Where an individual is not domiciled in the UK, they may be eligible to claim the remittance basis of taxation. For an individual who has been UK resident for a number of years, there are additional rules which may deem them to

Social security agreements

Social security agreementsThe purpose of social security agreementsSocial security agreements exist for three main purposes:•to ensure contributions are not paid twice on the same earnings•to offer some protection to social security benefit entitlements by allowing contributions to be aggregated or treated as having been paid in another country•to ensure contributions are payable somewhereAgreements can be between two individual countries, such as the bilateral agreement between the UK and the US, or the UK and Turkey, but they can also be agreed by groups of countries. The largest in the latter category is the EU which covers all the Member States plus some EEA countries (see the EU provisions guidance note). The UK also has a collective agreement with Jersey, Guernsey and most of the other smaller Channel Islands. Most countries with developed social security schemes will have a series of agreements.Some countries, such as the US, have a fairly standard format for their agreements with only minor variations from country to country (see below for more on the UK / US agreement). In more recent years the UK has tried to use a standard format which generally allows a continuing period of five years in the home country social security scheme, but there can still be variations in the agreements.Following Brexit, an employee who is seconded between the UK and the EEA countries or Switzerland, beginning on or after 1 January 2021, is still likely to be able to elect to stay in their home country’s

PAYE obligations

PAYE obligationsSTOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.Coming to work in the UKAn employee is subject to income tax if he is resident or carrying out employment duties in the UK. Just one day of work in the UK can result in a UK tax liability for the individual. It can also result in pay as you earn (PAYE) obligations for the employer. See the Setting up a payroll and Employees starting and leaving ― payroll consequences guidance notes.PAYE obligationsUnder normal procedures an employer is required to consider the status of any individual performing work on their behalf. See the Employment status ― why it matters guidance note. Payments to employees are required to be made under the PAYE regulations. However, registration is not required for an employer PAYE scheme if all employees are paid below the national insurance threshold (lower earnings limit) and do not have another job. Under real time information (RTI) reporting, an employer is required to operate PAYE, where at least one employee is earning at least the lower earnings limit, in which case all payments of earnings to all employees must be reported

Benefit entitlements

Benefit entitlementsShort-term benefit entitlementsShort-term benefits are those payable for sickness, unemployment and maternity absences, and usually require a recent history of social security contributions before any payment can be made. Each country has its own rules covering benefit entitlements and these can vary significantly. Where an individual moves from one country to another and where a social security agreement exists it may be possible for contributions paid in one country to be treated as having been paid in another.The provisions of the various social security agreements have to be considered separately, but in practice this is usually only an issue where individuals are moving between EU countries. There is a general requirement that a contribution needs to have been paid in a country where a claim is made immediately before the contributions paid elsewhere can be taken into account.See Example 1.The authorities in each of the countries involved can liaise and provide the necessary contribution details, but this will take time and inevitably delays the payment of any benefit. A quicker route is for the individual to obtain a portable document U1, which will help with an unemployment benefit claim. This is a statement of recently paid contributions issued on request to an EEA national when he leaves an EU country. For non-EEA nationals, the statement of contributions is form E301. The U1 and the E301 are readily acceptable by the social security authorities in all EU countries for the purpose of unemployment benefit claims. An employee leaving the

Foreign employment

Foreign employmentSTOP PRESS: The remittance basis is to be abolished from 6 April 2025, although this only applies to foreign income and gains arising on or after that date. The remittance basis rules still apply to unremitted income and gains arising before that date but remitted later. The legislation is included in Finance Bill 2025. For more details, see the Abolition of the remittance basis from 2025/26 guidance note.IntroductionLiability to UK tax depends on two key factors: residence and domicile. Residence refers to the individual’s tax status on a year by year basis. Domicile is the place which a person regards as their true home. See the Residence ― overview and Domicile guidance notes. Note that it is possible for a non-domiciled person to be deemed to be UK domiciled if certain conditions are met. For details, see the Deemed domicile for income tax and capital gains tax (2017/18 to 2024/25) guidance note.An employee who works overseas may be entitled to extra reliefs and exemptions from UK tax. This guidance note covers:•reliefs for travel and subsistence when travelling overseas•exemptions for termination payments made to individuals who have worked overseas for part or all of their employment•special rules that may apply to UK resident, but non-domiciled, employees•special rules for employees in the first three years of residence (known as overseas workday relief)It does not cover the position where an individual leaves the UK to work overseas. This is dealt with in the Residence ― issues on

Residence ― issues on leaving the UK up to 5 April 2013

Residence ― issues on leaving the UK up to 5 April 2013IntroductionThe impact of residency status on the liability to UK tax is discussed in the Residence ― overview guidance note.The rules on determining residency status changed on 6 April 2013 with the introduction of the statutory residence test (also known as the SRT). This guidance note considers the impact of departure on the UK residence position under the old rules in place up to 6 April 2013. For guidance on determining residence status in the tax years prior to 2013/14, see the Determining residence status (pre 2013/14) guidance note.It is a good idea to read both the Residence ― overview and Determining residence status (pre 2013/14) guidance notes before continuing. The Ordinary residence ― issues on leaving the UK up to 5 April 2013 and Leaving the UK ― UK source income guidance notes may also be useful.As noted above, this guidance note deals with those who left the UK before 6 April 2013. The position for those coming to the UK before this date can be found in the Residence ― issues on coming to the UK up to 5 April 2013 guidance note.This guidance note only deals with income tax. The rules for capital gains tax (CGT) are covered in the Simon’s Taxes E6.137E.The position from 6 April 2013 is covered in the Residence ― issues on leaving the UK (2013/14 onwards) guidance note.Important note regarding links to legislationThe legislative links in this guidance note are

Living accommodation

Living accommodationEmployers may provide living accommodation to their employees ‘by reason of their employment’. There is specific tax legislation that covers the provision of accommodation and the expenses associated with it. In certain circumstances, a statutory exemption from tax is available for particular employments.This guidance note outlines the benefits in kind potentially taxable when living accommodation is provided to an employee, alongside potential exemptions which may apply. Other benefits, which are unlikely to be exempted, are outlined in the Utilities, council tax and other bills in accommodation and the Furniture in accommodation provided by employer guidance notes. An overview of the different benefits possibly taxable is also given in the Client factsheet ― employer provided accommodation ― how various payment elements are taxed as benefits in kind .Living accommodation benefitA tax liability on the provision of accommodation to an employee is imposed by ITEPA 2003, s 102. The section states that if accommodation is provided for all or part of a tax year, then the cash equivalent of the benefit should be treated as earnings. The calculation of the cash equivalent is discussed below. A liability can also arise under ITEPA 2003, s 62 as earnings where employers settle employee’s rents or provide special entitlements in relation to rent.The term ‘provided’ should be given its everyday meaning; there are no specific legal definitions of it in relation to living accommodation. The accommodation does not necessarily have to be provided by the employer. As long as the accommodation is provided