Income Tax Relief

This guide has been extracted from guidance issued by the States of Guernsey Revenue Service to assist organisations wishing to apply for Charitable Exemption from Income Tax.

Exemption from Income Tax

Income received by a Guernsey registered charity is not taxable as long as it’s used for charitable purposes only. Charities must register with the Revenue Service to claim tax relief on eligible donations.

To find out whether a charity is required to complete a tax return please click here …

From January onwards, charities can claim tax relief on private donations over £500 made to them in 2025. The tax relief will add an extra 25% to a donation. This is a quick and easy way to boost a charity's finances in times when operational costs are soaring.

The process is simple and involves the donor and the charity:

Step 1 The Donor’s Declaration
Donors complete a CH1 – Charity Payment Certificate, confirming that they have paid income tax in Guernsey. The donor provides this certificate to the charity.

Step 2 The Charity’s Claim
At the beginning of the calendar year, the charity submits a CH2 – Claim for Repayment, attaching the donor declaration. This is sent to the Guernsey Revenue Service.

Once approved, the Revenue Service pays the reclaimed tax directly to the charity, increasing the total value of the donation by 25%.

Frequently Asked Questions

What is a Guernsey Registered Charity (GRC)?

A GRC is a charity registered in accordance with The Charities etc. (Guernsey and Alderney) Ordinance, 2021. All such charities can be verified by using the Search option on the Guernsey Registry website https://guernseyregistry.com/ under the heading of Charities.

What is meant by a charitable donation?

A charitable donation means a donation made in favour of a charity. This must be an outright gift, made in cash/cheque/bank transfer or by debit/credit card; it must have no conditions attached and no benefit can be derived by the donor, or anyone connected with the donor, in return for the gift. Gifts must be in the form of money.

Can a charity backdate claims?

Yes. There is no statutory time limit in Guernsey for a charity to claim tax relief on donations, other than the practical constraint that claims cannot go back before 2010 when the legislation was introduced. Any claim for earlier years must be supported by the required declarations and records to confirm that the donations meet the conditions set out in the law. Please also note that the following criteria has changed over the years.

• 1 January 2010 – 31 December 2020: The maximum claim was £5,000 per individual, or £10,000 for a married couple (as they could aggregate their income).

·      1 January 2021 – 31 December 2022: The maximum increased to £7,500 per individual, or £15,000 for a married couple (aggregation still allowed).

·      1 January 2023 – 31 December 2024: The maximum remained at £7,500, but claims could only be made on an individual basis due to the introduction of independent taxation on 1January 2023.

·      From 1 January 2025: The maximum has increased to £10,000 per individual.

The minimum level is currently set at £500 in respect of donations made to a particular charity in the calendar year, so no relief is available for donations under that limit. This was put in place in order to keep the administrative burden on charities and this office to a minimum; it would create significant administrative difficulties for the donor and/or the charity if they were required to retain/create documentary evidence to support a claim for relief from income tax in respect of donations made to street collections or sponsored events, for example.

It therefore follows that no relief is available if the donor paid £100 to five different GRCs in the calendar year; in order to qualify, the donor would have to pay £500 to one GRC, although the donations do not necessarily have to be made in one lump sum but can be made at different points throughout the year.

Can I pay more than the maximum level during the year?

Yes, but a GRC/GRCs can only claim a repayment of tax relief up to the highest level for that year. In 2025 this will be £2,500 per individual (i.e. £10,000 net, grossed up to £12,500, at 20% = £2,500). Therefore, once the donor has contributed the maximum £10,000, no repayment can be claimed on any further donations made during the year. The donor’s certificate should show the amount which qualifies for repayment.

If, for example, the individual has already certified payments during the year amounting to £7,000 and then makes a further donation of £1,000 to a charity, the certificate should show the payment of £1,000 being made but that only £500 would be a qualifying donation (i.e. £7,500 less the £7,000 already certified). If any further donations are made during the year, either no certificate is completed or any that are show the qualifying payments as “nil”.

What are the conditions that must be met for a Guernsey Registered Charity to be able to claim a repayment?

The individual making the donation must make a written declaration to the GRC that:

(a) The donation is made to a Guernsey Registered Charity.

(b) The donation is being made by an individual from his/her income in respect of which the donor has been charged to income tax and has paid tax at the individual standard rate in the year of charge in which the donation is made.

(c) The amount of the donation, when aggregated with the amount of any other payment made by the same individual to the same Guernsey Registered Charity in the same year of charge is at least £500.

(d) The amount of the donation, when aggregated with the amount of any other payment made by the same individual to the same or any other Guernsey Registered Charity to date in the same year of charge does not exceed the relevant annual limit (see note below).

(e) The donation, and any other payment referred to in paragraph (c) or (d) is not made under a deed of covenant entered into before 1st January 2010.

Note: If the donor has made donations exceeding the relevant annual limit as a single payment, or in aggregate, during the calendar year, when completing the certificate to pass on to the charity, he/she should restrict the amount qualifying for repayment accordingly

How does a Guernsey Registered Charity make a claim for a repayment of tax?

Claims for repayment may only be made after the end of the year of charge (calendar year) in which the donation was made. For example, claims in respect of 2024 should not be sent to the Revenue Service until after 1st January 2025. 

The relevant certificate (“CH1 – Charity Payment Certificate”) may be printed from the Revenue Service webpage, completed by the donor and passed to the charity. 

To claim tax relief, charities must also complete form “CH2 – Claim for Repayment”. showing the qualifying donations received, as certified by each donor on FORM CH1. The certificates (FORM CH1) should be attached to the Claim for Repayment (FORM CH2) and sent to States of Guernsey Revenue Service, P O Box 37, Sir Charles Frossard House, St Peter Port, GY1 1FH or by email to revenueservice@gov.gg .

For more than 20 donors, include form “CH3 – Repayment Summary”. 

Forms are available at Income tax relief - States of Guernsey under “Charities and Not for Profit Organisations”.

What happens if a claim for repayment is found to be wrong?

If the declaration made by a donor is found to be incorrect, incomplete or is false, deceptive or misleading in a material particular then it is void and the charity shall not be entitled to claim a repayment of income tax.

If a repayment has already been made to the charity by the Director of Income Tax it is repayable to him on a “joint and several” basis by the individual who made the declaration and/or the charity.

How is a Deed of Covenant that was set up on, or before, 31st December 2009 treated?

Where a Deed of Covenant was entered into prior to the 1st January 2010, and the Deed remains valid and enforceable on that date, it will be allowed to run its course.

However, the Deed is deemed to have expired if at any time after 31st December 2009:

a.the covenantor ceases to be under any obligation to make donations under it,

b.the Deed is amended in any material aspect, or

c.the obligations under the Deed are extended or renewed.

Put simply, payments made under the terms of a Deed of Covenant set up before 1st January 2010 would continue to be claimable on the personal tax return of the donor provided the Deed had not expired or was not amended, extended or renewed.

For clarification, donations to a charity under a Deed of Covenant entered into prior to 1st January 2010 cannot be an exempt charitable donation, so the charity may not claim a repayment of the tax paid in respect of any donations made by an individual under a Deed.

If a Deed of Covenant that existed at 31st December 2009 is renewed or amended on 1st January 2010, or subsequently, it would not qualify the person making the payments for relief; any payment made on or after 1st January 2010 would only be valid for relief to the extent that the charity could claim a repayment in respect of the tax on the donations.

The notes and information set out above are intended to be for the purposes of guidance only.  If you have a query that is not covered by the notes then you can contact the Revenue Service, by e-mail to revenueservice@gov.gg  by letter or telephone on 01481- 225700

 

This information is offered to assist charitable organisations.  It should not be regarded as comprehensive and charities should take appropriate advice to ensure they comply with their obligations.  The Association of Guernsey Charities accepts no responsibility for any person or organisation using these guidelines.