J7. Benefits provided by charity

- Purely voluntary payments (recipient had no enforceable right to be considered) not income

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​- If a payment is purely voluntary, such as a gift, it will not be income for the recipient. 

- "As [Counsel for HMRC] rightly observed, the question whether a payment constitutes income (which requires that it should not be purely voluntary) and the question whether it has a source are closely bound up together." (HFFX, §97)

- A legally enforceable right to be considered as a discretionary beneficiary of a trust means that the payment is not purely voluntary.

- "As Falk LJ pointed out (para 52) this is to be contrasted with the right of a discretionary beneficiary under a trust to be properly considered as a potential recipient and to have their interest protected by a court by compelling due administration of the trust: see Snell's Equity, 34th ed (2019) at 22–005; Gartside v Inland Revenue Commissioners [1968] AC 553, 617–618; and Cunard's Trustees." (HFFX, §107)

- But if the recipient has no right at all to seek to control the exercise of the relevant discretion, it is purely voluntary:

- "Unlike in the present case, where the Braganza principles apply to give the individual members certain rights in relation to the exercise of discretion by GSAM and Mr Gerko, and hence a sufficient interest as to prevent the payments made from being a "mere voluntary gift", in Stedeford v Beloe the taxpayer had no right at all to seek to control the exercise of the relevant discretion. Under the school's charter, the relevant beneficiary was to be the school rather than anyone else, including retired staff." (HFFX §107)

- For example, in Stedeford v. Beloe, a series of payments to a former headmaster were not income of the headmaster because they were made under a discretion to apply income for the benefit of the college:​

"[106] By contrast, in Stedeford (Inspector of Taxes) v Beloe [1932] AC 388, the Reverend Beloe was held not to be taxable on a series of payments made to him following his retirement as headmaster of a school under a power conferred on the school's governing body under its charter. The important point was that the payments were "a mere voluntary gift" which depended on "somebody else's goodwill" (per Viscount Dunedin at p 390). While the charter permitted pension payments to be made, that was pursuant to a power conferred on the governing body to apply income for "such purposes as in their absolute discretion they may deem to be for the benefit of the college". Again, the close association of the question whether a payment is purely voluntary and whether there is a relevant source for the sum received to qualify as taxable "income" of the recipient is evident." (HFFX)

- Most charitable trusts are purpose trusts without beneficiaries.

- On that basis, no recipient will have an enforceable right to exercise any control over the exercise of the trustee discretion as to who to benefit and the sum should be purely voluntary. 

- "It is of the essence of a charitable trust that it is a trust for the promotion or advancement of social purposes rather than a trust for individual beneficiaries. Of course, individuals may benefit from the application of trust moneys, but they are not, as individuals, the beneficiaries of the trust and may not enforce its terms. If the purposes of the trust are charitable, they may be enforced by the Attorney-General; if they are not charitable then, with certain anomalous exceptions, they are not enforceable and the trust is not valid." (Latimer)

- Same will apply where the payer is a charitable company (the payer in Stedeford was a corporation founded by Royal Charter).

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Legislation: 

Cases: 

Latimer v. CIR [2004] UKPC 13; 

HFFX LLP v. HMRC [2026] UKSC 17; 

HMRC manuals: 

Commentary: 

See also:

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