A charitable donation is a gift made by an organisation to a non-profit organisation, charity or private foundation. The most common form this takes is cash, but it can also take the form of real estate, motor vehicles and other assets or services.
What's included
Money donated, equipment or trading stock, land, property or shares in another company, employees (on secondment) sponsorship payments.
If something such as tickets to an event are received in return for the donation the tax relief available is as follows: Up to £100 - less than 25% of the donation, £101 - £1,000, £25 and £1,001 and over 5% of the donation (up to a maximum of £2,500).
Where these limits are breached tax relief is not available.
What's not included
There are some circumstances where donations will not qualify for tax relief, so be sure to read the `How is it taxed?` section carefully.
How is it taxed?
In most cases tax relief is available on donations when made for a genuine business purpose. Check the circumstances below for when tax relief is not available:
No tax relief is available for donations that cannot demonstrate a business purpose, a general philanthropic purpose is not deemed to be wholly and exclusively for the purpose of your trade and will not get any tax relief.
Nor will any relief arise on donations that bring your company into a tax loss making position.
Any donation made with a condition that the company will receive something in return for the donation or that the donation must be repaid will not qualify for tax relief (subject to de-minimis rules in 'included'). Donations to registered community amateur sports clubs.
Tax tips
Your company can pay less Corporation Tax when it gives money to a charity, so dig deep!