§ Mr. Norman Atkinson
asked the Chancellor of the Exchequer what is the capital transfer tax position on gifts made to political parties; if he will set out the conditions to which such gifts must conform; and if he will make a statement as to whether any other ways exist whereby taxpayers or limited companies can claim tax relief in respect of political donations.
§ Mr. Denzil Davies
, pursuant to his reply [Official Report, 12th April 1978], gave the following information:
Gifts to political parties are exempt from capital transfer tax, subject to an aggregate limit of £100,000 if made on or within one year of death. The recipient must be a political party which at the last General Election before the gift either had two members elected to the House of Commons or had one member elected and secured not less than 150,000 votes for its candidates.
Simple donations to political parties carry no other tax relief or special tax treatment for the donor or donee. But an individual making annual payments under a deed of covenant to a political party may, as with covenants generally, deduct and retain basic rate income tax from the gross payment: the gross payment is then treated as the donee's income on which the donee has borne that tax. This procedure involves a relief to the donor in form rather than in reality, since in practice he will decide on his contributions in terms of the net sum by which he is prepared to be out of pocket.