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This guidance note sets out the conditions for the tainted gifts to charity anti-avoidance rules to apply. The tainted gifts rules remove the beneficial tax treatment of gifts for the donor where the outlined conditions apply.

From 1 April 2011, where a donor receives certain financial benefits from a charity or community amateur sports club (CASC), the donor can be denied tax relief. In the case of donations under gift aid, a tax charge may be levied on the donor. Such donations are termed tainted. The tainted donations rules apply to gifts of cash (both via gift aid and payroll giving) and assets to charity which would otherwise qualify for tax relief.

Before April 2011 different rules applied to ‘substantial donors’. These anti-avoidance rules may still apply to contractual obligations before 1 April 2013, which have not subsequent been varied. Where the contract is varied, the tainted gifts rules apply. For details of the substantial donor rules see Simon’s Taxes B5.851 and HMRC charity