Millennium Gift Aid: UK tax-payers only

TO HELP THE WORLD'S POOREST COUNTRIES

1. At a seminar held on 17 December 1997 to discuss progress on the Mauritius Mandate programme, the Chancellor announced that he was considering tax incentives to encourage charitable gifts to educational and anti-poverty projects in the world's poorest countries. He asked the Inland Revenue to consult on the details.

2. Since then, the Inland Revenue have received comments from a wide range of interested parties. As a result, the Government has decided the initiative should take the form of a distinctive scheme, to be known as 'Millennium Gift Aid'.
   
   It is intended that the scheme should be run by existing charities which have the necessary structure and expertise to allocate the funds raised to new or existing projects in the target countries. Any recognised UK charity will be able to take part in the scheme if it can satisfy the necessary criteria which will be set out in legislation in the Finance Bill and in subsequent Regulations.

3. Under the new proposals, Gift Aid relief will be given for gifts of 100 pounds to the target causes which are made between the start date of the scheme, later this year, and 31 December 2000. The relief will apply to single payments of this amount or more, subject to the existing conditions for Gift Aid, and, in addition, to gifts made by instalments once those instalments have reached 100 pounds or more.

4. Similarly, the tax arrangements for giving in-kind by businesses, which currently apply only to gifts to schools and colleges in the UK, are being extended for the same period to assist educational projects in these countries.

5. Countries eligible to benefit will be those designated as "low income countries" by The World Bank for the purpose of granting International Development Aid loans, predominantly the developing countries in Africa and Asia. A list of countries which are currently designated as "low income countries" by The World Bank is attached at Annex A.

6. Charities wishing to participate in the scheme will register their intention in advance with the Inland Revenue.

7. The Treasury will issue information in due course to explain more fully what charities and donors will need to do in order to participate in the initiative and to announce the date on which the scheme will begin.

8. These special time-limited measures are being introduced against the background of the wider Charities' Taxation Review announced last year. That Review is looking at all aspects of charities' taxation, particularly the current VAT arrangements. The Government intends to issue a consultation document, setting out proposals for further discussion, in the spring. This announcement is in no way intended to anticipate the Government's decisions on the outcome of the wider Review. However, the Government hopes that experience of operating the measures announced today may provide useful guidance on the practicality of provisions of a similar kind for the charitable sector as a whole.

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