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Company tax deductions for charitable donations

Source: HM Revenue & Customs | | 26/02/2019

There are special rules in place when a limited company gives to a charity. This can include Corporation Tax relief for qualifying donations made to registered charities or community amateur sports clubs (CASC), as well as Capital Allowances for giving away equipment that has been used by a company.

However, the rules are different if the company is given something in return for making a donation, such as tickets for an event.

Donation amount   Maximum value of benefit that is acceptable
Up to £100   25% of the donation
£101 - £1,000   £25
£1,001 and over   5% of the donation (up to a maximum of £2,500)

These rules apply to benefits given to any person or company connected with your company, including close relatives.

Charity sponsorship payments are different from donations because the company gets something related to the business in return. A company can deduct sponsorship payments from its business profits before it pays tax by treating them as business expenses.

Payments qualify as business expenses if the charity:

  • publicly supports the company's goods or services
  • has links from their website to the company's
  • permits them to sell their goods or services at the charity's events or premises
  • allows the company to use their logo in company’s printed material.
 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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