ICTA88/S84 as amended by FA91/S68, provides relief for gifts of
equipment, made on or after 19 March 1991, by a person carrying on
a trade, profession or vocation, to schools and other educational
establishments.
The object of this relief is to encourage businesses to
donate equipment to schools and universities. It is directed
particularly at information technology and scientific equipment,
although relief is also available for a much wider range of gifts,
including books and sporting equipment.
The relief applies to gifts of equipment which represent
trading stock of the donor business. It also applies to disposals
of the donor business’ capital assets prior to periods ending
after 5 April 2001 for IT purposes and 31 March 2001 for CT
purposes. The gift may be either new or second-hand. Cash gifts,
however, are not included, though some form of relief may be
available on first principles or under other legislation, such as
the ’Gift Aid'.
The equipment that qualifies comprises ’articles'
counting as plant and machinery for capital allowance purposes (see
CA21100 onwards).
If the gift is of an article which the trader makes or sells, it must be one that would have qualified for capital allowances in the hands of the recipient if the recipient educational establishment had itself owned the article, used it for the purposes of its activities and had its activities amounted to the carrying on of a trade.
If the gift is of an article used in the trade, it is sufficient
that the donor was entitled to capital allowances and has treated
the cost of the asset as qualifying expenditure, ICTA88/S84 (1)(b).
Normally, when a trader gives away an article for which he or
she has claimed a plant or machinery allowance, (CAA01/S61, makes
the disposal value included in the capital allowances computation
the price which the article would have fetched if sold in the open
market (CA23240 and CA23250). For disposals in periods ending up to
5 April 2001 for IT purposes and 31 March for CT purposes the
relief operates by providing that the donor of the gift shall not
be required to bring into account any disposal value for that
article.
For periods after the above dates CAA01 removes the
references to fixed asset disposals from Section 84 and these are
now covered at CAA01/S63 (2)(c). This says that where an asset is
gifted to a designated educational establishment the disposal value
is nil.
It is sometimes the case that articles used in the course of trade and which fall within the definition of machinery or plant are allowed as a revenue deduction because the expected useful life is less than two years, CA21100 refers. Relief under this section should not be denied solely because, following the guidelines in CA21010 and following, in the recipient's hands relief would have been given as a revenue deduction rather than under the plant and machinery code.
