The following are important points with regard to Lump Sum Donations :
The donation must be more than £100 but not exceed £500,000.
The donor must be resident in Jersey for at least three years and should not be a partnership.
The scheme only operates for charities exempted under Article 115(a) i.e. only charities established in Jersey.
The donor must pay in income tax on his income at least the amount that is deducted from the donation otherwise there is no advantage to be gained.
For further information concerning applications for Exemption from Jersey Income Tax and Lump Sum Donations contact:
The Comptroller of Income Tax, Cyril Le Marquand House, The Parade, St Helier, Jersey. JE4 8PF. Tel: 01534 440300
A booklet entitled Lump Sum Donations to Charity explains how the scheme operates and can be viewed on the Income Tax Office web site and use the search facility for “lump sum donations”
A deed of covenant is one of the so called “tax efficient” ways in which an individual can make a donation to a charity.
This is a scheme where the individual signs a deed of covenant under which they promise to pay to the charity a sum net of Jersey income tax for a period of at least five years (i.e. five annual payments).
The charity in turn reclaims the tax deducted at source upon presentation of the appropriate Certificate of Deduction of Income Tax (Form R10AP).
The right to deduct tax from the annual payment under the deed is covered in Article 87A of the Income Tax (Jersey) Law 1961. Section (3) of that Article states that the charity must be formally exempted from income tax under the provisions of Article 115(a), Article 115(aa) or Article 115(ab) of the Income Tax (Jersey) Law 1961, i.e. the charity must be established in either Jersey, the United Kingdom or Guernsey.
It follows that Jersey residents should not deduct Jersey income tax from any covenant payments made to charities established outside these jurisdictions.
The Income Tax Department help desk can provide further information at PO Box 56, Cyril Le Marquand House, The Parade, St Helier, Jersey, JE4 8PF. Tel: 01534 440300