Companies: Tax relief on donations

Companies can get tax relief on donations: a donation is allowed as a business expense.

Gift Aid for Companies does exist, although it’s not strictly “gift aid” it gets called that sometimes; the receiving charity does not claim back, but instead the company makes the donation as gross, and then claims tax relief.

“3.11.1 Companies (and unincorporated associations) can claim tax relief for qualifying donations paid to charities (bodies or trusts accepted as charities for UK tax purposes).

New rules introduced in Finance Act 2014 section 35 and taking effect from 1 April 2014 mean that sports clubs registered with HMRC as a CASC can also take advantage of this tax relief. Generally, relief for Gift Aid donations is available in the accounting period during which the donation is made, but there are special rules for companies wholly owned by charities.

3.11.2 Gift Aid donations made to charities and CASCs [community amateur sports clubs] by companies are paid gross and so, unlike the individual Gift Aid Scheme, no tax is repayable to charities or CASCs.

For a charity or CASC the donation is treated as potentially taxable income, but is exempt from tax provided the donation is applied for charitable purposes by a charity or qualifying purposes by a CASC.

3.11.3 Charities and CASCs receiving Gift Aid donations from companies should keep accurate accounting records of company donations received, so that they can identify these in their accounts and include them on their tax return.”