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).
