Donations & the Tax Credit

Donations do not automatically qualify as charitable donations, for the tax credit from Inland Revenue. Some high profile organisations have recently been refused Charities Commission registration. Where organisations have a mixture of charitable and other (eg political or social) activities, it has been suggested that the organisations split in two to maintain their previous tax advantages. Rotary Clubs are already underway in this regard. If you want to make a 'qualifying' donation, then make sure you're making payment (and getting a receipt from) the right entity. The Inland Revenue has a web page that lists donee organisations that have been approved for the purposes of sections LD1, DB 41 and DV 12 of the Income Tax Act 2007. When a person makes a donation to an organisation listed there, generally they can claim a tax credit for that donation. You can still make donations to other organisations - you just can't get a tax credit for them. State and state integrated schools or their boards of trustees, do not have to be approved to have donee organisation status. However only certain payments qualify for the tax credit. Finally, we note also that some organisations invite donors to donate their tax credit to that organisation. Please note that this does not mean that the requesting organisation is actually a registered charity, and that your donation to that organisation is therefore eligible for the tax credit. The effect of a recent example we've seen, was that any tax credits claimed in relation to other donations made by our client to approved organisations would have been paid to the one organisation in respect of which our client's donation did not earn a tax credit.