On 15 March 2023, the UK Chancellor presented the UK Spring Budget to Parliament. The budget announced that the tax definition of a charity under Paragraph 2, Schedule 6 of the Finance Act 2010 and the tax definition of a Community Amateur Sports Club (CASC) under section 661A of the Corporation Tax Act 2010 are amended so that solely charities within the jurisdiction of the High Court in England, Wales, Northern Ireland and the Court of Session in Scotland can avail of charitable tax reliefs. The new provisions also require CASCs to be based in the UK and provide facilities for eligible sports in the UK in order to qualify for such reliefs. These measures were effective from 15 March 2023 and any new charity or CASC tax relief applicants must comply with the new changes.
In practice this means that any European Union (EU) and European Economic Area (EEA) charities and CASCs who have not previously been approved by HM Revenue and Customs (HMRC) as qualifying for UK charitable tax relief, will now be prevented from claiming such reliefs. Non-UK charities and CASCs that have previously been accepted for charitable relief will have a transitional period until April 2024 during which they can continue to claim UK tax relief (or seek to set up operations in the UK in order to continue to benefit from UK tax relief). From April 2024, all non-UK charities and CASCs, including those which were previously recognised by HMRC as being eligible for charitable tax reliefs, will be unable to claim UK charitable tax benefits. The stated policy objective of the change is to ensure that UK taxpayer money only supports UK charities and CASCs, and support compliance activities for HMRC. Further information is available on the HMRC website here.
If you have any queries in relation to how this change in UK tax law might affect your Irish charity or amateur sports club, please contact a member of the Arthur Cox charity group.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.