Business Tax Savings

HMRC Guidance on Gifts to Charity made by Companies

Companies can get tax relief on gifts of money to charities. The relief works differently than for individuals, self-employed sole traders and partnerships. This guide explains how companies can claim tax relief when donating money to charity.

Useful Links

Claiming Corporation Tax relief on gifts to charity
How to claim Corporation Tax relief
Time limits for claiming Corporation Tax relief
Contacting the HMRC Charities Helpline
More useful links
   

Claiming Corporation Tax relief on gifts to charity

    Gifts of money made to a charity by your company should be paid gross - before tax is deducted. These donations are deductible from the total profits of your business when calculating Corporation Tax.

The charity doesn't need to make a Gift Aid tax repayment claim because no tax has been paid. The charity can claim exemption from tax on company donations.
 

Donations that qualify for Corporation Tax relief

    Your company can claim relief as long as the donation is a payment of money that is not a distribution of profit such as a dividend.

For donations to qualify, any benefits provided to your company or a 'connected' person must be below the following limits:
 
Amount of donationBenefit value limit
£0 - 100 25% of the donation
£101 - £1,000 £25
Above £1,000 - (donated up to and including 5 April 2007) 2.5% of the donation
Above £10,000 - (donated up to and including 5 April 2007) £250
Above £1,000 - (donated on or after 6 April 2007) 5% of the donation
Above £10,000 - (donated on or after 6 April 2007) £500
 
A person is 'connected' if they are:    
  • The donor's husband, wife, civil partner or linear relative - for example son, daughter, parent, grandparent, or grandchild.
  • Any linear relative of the donor's wife, husband or civil partner.
  • A company under the control of the donor, or under the control of any of the above.
   

Donations that don't qualify for Corporation Tax relief

     
  • Gifts that come with a condition about repayment.
  • Gifts that come with a condition or arrangement that the charity will purchase property (other than as a gift) from your company or a connected person.
  • For donations made before 1 April 2006 these restrictions applied to close companies only. For donations on or after that date they apply to all companies.
  • Gifts where your company or a person 'connected' to your company has received a benefit over a certain value in return.
    Companies can also claim Corporation Tax relief on other gifts to charity. Follow the links below to find out more.

Gifts to charity of land, buildings and shares
Gifts to charity of equipment, trading stock, or secondment of employees

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