UK Law and Practice Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
10.2 Common Charitable Structures UK charities typically take one of the following forms depending on the size, nature of the charity’s activities and level of risk involved. • A charitable trust, whereby trustees manage assets solely for charitable purposes: (a) trustees are exposed to potential personal liability if the trust fund is insufficient to meet liabilities; and (b) changing trustees necessitates transfer of assets, which can be administratively burden - some. • A charitable company usually limited by guarantee with members and directors: (a) this is well suited for larger charities, and those with staff, holding property and entering into contractual arrangements; and (b) the need to register with Companies House of - fers transparency and potentially easier access to funding but also adds an additional layer of regulation and governance. • A Charitable Incorporated Organisation (CIO) is a relatively new type of corporate structure, offer - ing limited liability and simpler administration (as regulated only by the Charity Commission). This is likely to be most attractive for medium-sized chari - ties, though some funders may be cautious due to its newer status. Smaller charities may prefer unincorporated associations for their simplicity and lower costs.
UK same-sex marriages or civil partnerships overseas depends on the laws in the foreign jurisdiction.
10. Charitable Planning 10.1 Charitable Giving
In the UK, the law encourages charitable giving through various tax reliefs afforded to charitable organisations and those who support them. Income tax relief applies when an individual either makes a donation using Gift Aid or under the UK’s Payroll Giving Scheme, allowing the charity to reclaim basic rate tax deducted at source, enhancing the value of the donation. A higher or additional-rate taxpayer can obtain additional income tax relief at 20% or 25%. Income tax relief is available on donations of land, property and certain shares. Gifts made to UK charities (including those permitted to make grants overseas) are exempt from IHT. Broadly speaking, there is a reduction in the rate of IHT from 40% to 36% where at least 10% of the chargeable estate is left to a UK charity. UK recognised charities enjoy exemptions from income and corporation tax on most income and gains if expended for charitable purposes.
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