The politics of giving
New regulation may reduce the number of givers donating money to a political cause, writes Alexander Dickinson
Until the early 20th century, the practice of ‘donating’ money to the Crown or the Government in return for titles, lands or political favours was relatively widespread. The advent of modern democracy soon all but eliminated these practices, but we still find that individuals and companies are prepared to give away large sums of money to support the political causes in which they believe. The Political Parties, Elections and Referendum Act 2000, which came into force in February, introduced wide-ranging regulation of the manner in which political donations can be made.Last year, the hundreds of millions of dollars spent in the US Presidential Election were all raised from private donors. In the UK, as recently as January, large donations were given to both main political parties and the General Election has just seen tens of millions of pounds spent by the parties, again mostly from private donors. Whether or not those donors succeed in furthering their political aims, they may well obtain valuable tax breaks. Political funding is, in fact, a highly effective manner of reducing your personal tax burden.Making tax efficient political donationsAll donations to qualifying political parties are exempt from inheritance tax. All political parties with at least two seats in the House of Commons are qualifying political parties. Any other political party that polled at least 150,000 votes at the last election while winning one seat is also treated as qualifying. Additionally, gifts of shares or other assets given to a political party can qualify for capital gains tax holdover relief. Opposition parties sought to introduce income tax relief for donations under £500, but this was resisted by the Government during the act’s passage through parliament.
This premium content is reserved for
Legal Week Subscribers.
Subscribe today and get 10% off.
A PREMIUM SUBSCRIPTION PROVIDES:
- Trusted insight, news and analysis from the UK and across the globe
- Connections to senior business lawyers within the leading law firms and legal departments
- Unique access to ALM's unrivalled, market-leading reporting in the US and Asia and cutting-edge research, including Legal Week's UK Top 50 and Global 100 rankings
- The Legal Week Daily News Alert, Editor's Highlights, and Breaking News digital newsletters and more, plus a choice of over 70 ALM newsletters
- Optimized access on all of your devices: desktop, tablet and mobile
- Complete access to the site's full archive of more than 56,000 articles
Already have an account? Sign In Now
For enterprise-wide or corporate enquiries, please contact Paul Reeves on Preeves@alm.com or call on +44 (0) 203 875 0651