The Civil Partnership Act 2004 creates an entirely new legal status of civil partner, which provides same-sex couples in the UK with the opp...

The Civil Partnership Act 2004 creates an entirely new legal status of civil partner, which provides same-sex couples in the UK with the opportunity to acquire a legal status for their relationship through registration and the same treatment as married couples for tax purposes.

From 5 December 2005, tax charges and reliefs and anti-avoidance rules will apply equally to married couples and civil partners. They will, however, not apply to couples of a different sex who co-habit. Those couples will continue to be treated as two separate individuals. The Civil Partnership Act gives the Inland Revenue the power to introduce regulations to effect the changes, and the Finance Bill will provide for the amendment of all primary and secondary tax legislation. The key areas affected include:

· inheritance tax - as with married couples, civil partners will be able to make gifts or bequests to their partners without giving rise to a charge to inheritance tax.
· capital gains tax will apply in relation to civil partners as it applies in relation to married couples; for example, civil partners will be “connected” in the same way as husbands and wives; and the transfer of assets between persons who are civil partners who are living together will be on a no gain/no loss basis, and thus will not attract a capital gains tax charge.
· company control tests - section 416 Income and Corporation Tax Act 1988 deems a company to be under the control of a person if it is controlled by an associate of that person. Section 417 defines “associate” and includes husband or wife. This definition will be amended also to include civil partners
· stamp duty and stamp duty land tax - there will now be an exemption from stamp duty and stamp duty land tax for transactions carried out in connection with the dissolution of a civil partnership in addition to those transactions carried out in connection with divorce - for example, the transfer of shares or the transfer of an interest in a home.

Gift Aid
Gift Aid enables an individual to make tax-efficient donations to charity. The scheme treats a donation as being made after the deduction of income tax at the basic rate. Charities are entitled to reclaim an amount equal to that basic rate of tax because they are exempt from tax on that income.

Provided the donor has paid the requisite amount of tax and informed the charity that Gift Aid is applicable, then the charity will benefit from an additional 28p for every pound given.
Gift Aid does not apply when the donor receives benefits in consequence of the donation in excess of 25 per cent of the value of the donation up to a maximum of £250 in any year. A donation will not be treated as a Gift Aid donation if this threshold is exceeded.

From 6 April 2006, any type of charity, not just certain heritage and conservation charities, will be able to benefit from the exemption which allows donors free admission to view the work of the charity following a donation, without such admission being considered a benefit for Gift Aid purposes.

The new rules also will provide that where a visitor makes a donation rather than paying the admission fee, then Gift Aid may apply where:

· in return for the gift, admission is valid for at least a year and for an unrestricted number of visits; or
· the right of admission is for less than a year but the gift is at least 10 per cent more than the amount which a member of the public would have to pay to gain the same right of admission.

Where either of these alternative tests is met by the charity, then the whole of the gift will be eligible for Gift Aid.