Tax relief on personal payments

Posted by QuintainT PM | on Wed, 25/08/2010 - 11:01 431 3 comments | report

I have just paid about £5000 to enable a Tanzania lad I know to start a medical degree in Dar Es Salaam. If he is successful this year there could be 5 more years of payments of at least £5000 per year. All these payments are direct to the student because the university doesn't accept direct transfers.

I assume that this arrangement is not valid for tax relief, but is there a way to structure it so that relief would be available? I had thought of establishing my own charity but I suspect that would involve too many costs, and you can't set up a charity for one beneficary I believe.

I will continue to sponsor the lad regardless but getting some cash back from HMRC for a change would be nice.

Comments

Your assumption is correct

Chris Smail | Wed, 25/08/2010 - 16:50 | Permalink

As is your belief.

Is there a medical education charity around he could apply to and you could give to, independantly of course?

An interesting thought...

QuintainT | Wed, 25/08/2010 - 19:10 | Permalink

There is indeed such a charity that I have been speaking to on an unrelated matter. Unfortunately they only support a different medical university. However I will investigate if there is a charity supporting my lads university or providing support generally. Thanks for the idea.

Tax relief for support of student

Dunedin | Mon, 30/08/2010 - 14:08 | Permalink

You are to be congratulated on your generosity. Well done! I agree that you cannot claim tax relief of a direct payment to the student. The practical question is whether you could arrange future payments in such a way that you qualify to Gift Aid. You cannot use the Charities Aid Foundation scheme, as this will only let you make onward payments to registered charities. However you may find a local charity that could help; perhaps a church, if you are a member of one. Some points should be considered. Firstly, the Gift Aid conditions are set out in ITA s416. It seems to me that these conditions do not prevent you making a Gift Aid donation on the understanding that the charity makes an onward gift; there would be no benefit to you. Secondly, you will see that the rules on disqualified overseas gifts have recently been abolished. Thirdly, it seems to me evident that the gift to the student would be charitable, as being in for the relief of poverty. Fourthly, there would be the question of whether the donation would be within the objects of the charity, but this can only be answered by reference to its own rules. I hope that these comments are of assistance.