Tax Relief on Charitable Donations
Giving to charity through your business isn’t just a great way to show your support of worthy causes, as it can also lower your tax bill in the process. Below is some guidance on how UK taxpayers and businesses can receive tax relief when donating to charities.
How can I donate?
There are many ways to donate to charity. If you're donating as an individual or sole trader, here are some suggestions:
Payroll Giving Schemes
Gift Aid on donations
Donating property and land
Leaving a gift in your will
What is Gift Aid?
If you’re donating cash to a charity through a website such as GoFundMe or JustGiving, there will be a box that you can tick in order to apply Gift Aid. This means that the organisation you’re donating to will receive an extra 25% on top of your donation with no additional cost to you.
Payroll Giving Schemes
Another great way to donate to charities is through a Payroll Giving Scheme. Employers give employees the option to donate some of their wages or pension fund into the scheme each month, which is deducted from their pay before tax is applied. Only registered charities can be supported through a Payroll Giving Scheme and community amateur sports clubs are unfortunately exempt.
(Don’t forget that we provide tailored payroll services, so we can manage your payroll and Payroll Giving Scheme side by side under a single service.)
Sponsoring a charity
Sponsorship deals are one of the most common methods for a business to support a charity, as they can open up valuable marketing, PR and brand awareness opportunities. The money spent on sponsorship can also be deducted from the company’s profits, essentially making them a tax deductible expense. Get in touch if you’d like to find out more about how to sponsor a charity through your business.
Donating land, property and shares
Cash isn’t the only way to donate to charities, as land, property and shares are popular ways to support worthy causes. Donating any of these means that you don’t pay tax on them and can also get relief on income tax and Capital Gains Tax, reducing your tax bill whilst making a generous donation that can make a huge difference to the daily running and ongoing growth of the charity. Again, this only applies to registered charities and not community amateur sports clubs.
This needs to be properly logged in your tax return, so make sure to ask us about our tax management services.
Here’s an interesting option you may not have considered: seconding employees to your chosen charity. This involves a member of your team being transferred to the registered charity for a set time.
The employee’s wages continue to be paid by your business whilst they’re helping the charity, which could be support with project management, human resources, administrative tasks, manual labour or anything else within your company’s skill set required by the charity. Your company can then claim tax back on PAYE expenses and salary.
Ask us about charitable giving
If you’d like to support a charity through your business and reduce your tax bill in the process, call our Northern office on 01482 235575, our London office on 0207 885 0605 or fill in the contact form below.
Tagged as: Tax & Expenses
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