Companies making donations

Assuming that the children’s hospice is a registered charity, your company will get corporation tax relief on the donation. To get the tax relief, the company simply makes the payment to the charity and deducts the amount as a 'non-trading charge' when working out its profit for corporation tax purposes.

Charitable donations cannot be used to create or increase your company's trading losses, and they cannot be carried over from year-to-year. So if you make a donation of more than your taxable profit, the excess is not tax effective.

Please note, if the company receives any benefit from the charity as a result of the donation, such as an advertisement in its newsletter, there are restrictions of the value of the benefit, in order that the donation still qualifies for relief.

Furthermore, there are different rules if you were to gift anything other than cash, such as land or equipment.

If you would like to discuss this or any other accountancy or tax matter, please feel free to contact your local TaxAssist Accountant.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. 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 article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.