There are a number of ways that businesses can support charities, and tax reliefs that can maximise the value of those gifts and act as an incentive for giving.
All companies can get tax relief when they give money to a UK, EU, Norwegian or Icelandic charity that is registered with HMRC but the relief works differently for companies, self-employed people and partnerships.
When a company makes a donation, it gets tax relief by deducting the amount given from its profits and pays less corporation tax. This is called ‘Corporate Gift Aid’- although unlike Gift Aid given from individuals, charities do not reclaim any tax from HMRC.
HMRC has further information and guidance on Corporate Gift Aid
Sponsorship is a complex area for tax purposes for both charities and companies. A company can get a tax deduction for payments to sponsor charitable activities if they are also made for the purpose of the company. This might be a payment to get publicity for the company or its products that can be regarded as a reasonable value for the amount paid. The position will depend on the facts in each case.
Companies can claim corporation tax relief for gifts of recognised shares (other than those in their own company), land and property made to your charity. They can also claim relief if the gift is sold to your charity at less than the market value.
Shares which qualify for relief are the same as those which qualify when they are given by individuals, subject to one exception – a company cannot give its own shares.
The tax relief works in the same way as for individuals. Companies get the relief in addition to exemption from any capital gains made on gift. Companies should deduct the amount while working out their company profits in the accounting period in which the gift is made.
When gifts are made by self-employed people or by partners in a partnership, the deduction is calculated in the same way as for individuals.
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