Whether it’s donating equipment to your area’s charity shop or sponsoring the local youth football team – charities are always looking for donations. Plus, it feels good to help out. You will be pleased to know that there are ways you can make your donations go further – for both you personally, and your company.
Gift Aid is basically the government making a small contribution to the charity of your choice on top of the amount you have paid. As a UK tax-payer and providing you pay enough tax, any donations made to a Gift Aid charity are eligible for the scheme.
Donating through a limited company
Charitable donations can be included in your accounts as a business expense, lowering your profit and Corporation Tax! However, it is important to consider that these rules only apply to donations made to national charities.
Donating as a sole trader
When donating to a charity as a sole trader or in partnership, the donation is not considered a business expense and will be treated as your drawings. If you pay above the 20% basic rate, you are able to claim the difference between the rate you pay and the basic rate on your donation. You can do this either through your personal tax return or by asking HMRC to amend your tax code.
Donating as an employee
You can get tax relief on any donations made through a payroll giving scheme, run by your employer.
What can I give to a charity as a business?
It does not have to be financial support you donate; you and your small business may be able to donate equipment. If your business has fixed assets that are no longer of use, surplus stock or raw materials these can be donated, and capital gains allowance claimed against the equipment.