TAX-EFFICIENT GIVING

  • Companies can claim tax relief on charitable donations they make, deducting the amount of the donation from profits prior to calculating corporation tax.
  • For further details about the effect of a donation on corporation tax liability, contact your company’s tax office or refer to the Inland Revenue's website.
  • Businesses such as sole traders or partnerships can donate through Gift Aid - a very simple and effective way to support UK charities.

GIFT AID FOR THE SELF-EMPLOYED

Gift Aid donations from the self-employed (sole traders) are treated in the same way as Gift Aid by individuals. Therefore, the donation will be treated as paid out of taxed income and the charity will reclaim basic rate income tax on it from Her Majesty’s Revenue and Customs (HMRC).

The trader will be required to complete a Gift Aid declaration for the charity. A higher rate taxpayer can get relief on the difference between the basic rate and the higher rate of tax on the gross amount of the gift on his or her tax return.

GIFT AID FOR PARTNERS

Gift Aid donations received from businesses that are run as partnerships are treated as donations of equal amount from the individual partners, unless the partnership decides to split them in different proportions. The tax position will be as described for Gift Aid by individuals.

Unless one partner has power under the partnership agreement to make a Gift Aid declaration on behalf of the partnership, a Gift Aid declaration will be required from each partner. This can be done on one form provided it includes each partner’s details. (The position is different in Scotland where a partner may make a Gift Aid declaration on behalf of the partnership by simply showing the partnership’s name and address.)

FURTHER INFORMATION

There is no limit on the size of the donations that can be made through Gift Aid.