Ltd Company Donations to Charity

I am a director of a small limited company and want to make a donation to a local children's hospice this Christmas. Can you advise on the best way to do this?

1st November 2009

Assuming that the childrenís hospice is a registered charity your company will get corporation tax relief on the donation.  For small companies (profits below £300,000) the rate is 21% for the tax year to 31 March 2010. To get the tax relief, the company simply makes the payment to the charity and deducts the amount as a 'charge' when working out its profit for corporation tax purposes.

Unlike the gift aid scheme for individuals, your company will make the full payment to the charity. You do not need to deduct any tax from the payment and the charity does not claim back any tax on the donation it receives.

You are no longer required to provide a Gift Aid certificate to the charity or provide a new form of declaration, however it is recommended that you retain evidence of all the charitable donations made in the year. 

If your company does not have a corporation tax liability in an accounting period where donations are made, there are special rules that determine how any loss created by the donation can be used. Your local TaxAssist Accountant can provide further details on this treatment.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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